The Matching Principle is part of Generally Accepted Accounting Principles (GAAP). It requires that revenues and their related expenses be recorded in the same accounting period.
As an example, Terrance Inc. sells $10,000 of merchandise in June. The merchandise was purchased from the supplier in May for $5,000. The revenue of $10,000 and the expense of $5,000 should be reported in June, the month when the revenue is reported as earned. The Matching Principle is the foundation of Accrual Based Accounting.
For more about GAAP and the Matching Principle, watch this video:
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