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The Accounting Convention of Matching means:
- a)Profit for the period to be matched with sales revenue
- b)Profit for the period to be matched with investment
- c)Expenses of one period to be matched against the expenses of another period
- d)Expenses of one period to be matched against the revenue of the same period
Correct answer is option 'D'. Can you explain this answer?
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The Accounting Convention of Matching means:a)Profit for the period to...
Matching Principle in Accounting:
The Accounting Convention of Matching refers to the principle of matching expenses with revenues in the same accounting period. This principle is crucial for accurately determining the profitability of a business and ensuring that financial statements reflect the true financial performance of the entity.
Explanation:
- Expenses matched against Revenue: The Matching Principle dictates that expenses incurred in generating revenue should be recognized in the same period as the revenue they helped to generate. This ensures that the true cost of generating revenue is accurately reflected in the financial statements.
- Recognition of Revenue and Expenses: By matching expenses against revenue, the Matching Principle helps in determining the net income for a specific period. This helps in evaluating the performance of the business and making informed decisions based on the financial results.
- Accrual Basis of Accounting: The Matching Principle is closely related to the accrual basis of accounting, where revenues and expenses are recognized when they are earned or incurred, regardless of when cash is exchanged. This method provides a more accurate representation of a company's financial position.
- Impact on Financial Statements: Matching expenses against revenue in the same period leads to the preparation of more reliable financial statements. It helps in avoiding distortions in profitability that may arise if expenses were not matched accurately.
- Compliance with Accounting Standards: Following the Matching Principle ensures that financial statements are prepared in accordance with generally accepted accounting principles (GAAP) or International Financial Reporting Standards (IFRS), depending on the jurisdiction.
Therefore, the Matching Principle plays a crucial role in ensuring the accuracy and reliability of financial reporting by aligning expenses with the revenues they helped to generate in the same accounting period.
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The Accounting Convention of Matching means:a)Profit for the period to be matched with sales revenueb)Profit for the period to be matched with investmentc)Expenses of one period to be matched against the expenses of another periodd)Expenses of one period to be matched against the revenue of the same periodCorrect answer is option 'D'. Can you explain this answer?
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The Accounting Convention of Matching means:a)Profit for the period to be matched with sales revenueb)Profit for the period to be matched with investmentc)Expenses of one period to be matched against the expenses of another periodd)Expenses of one period to be matched against the revenue of the same periodCorrect answer is option 'D'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about The Accounting Convention of Matching means:a)Profit for the period to be matched with sales revenueb)Profit for the period to be matched with investmentc)Expenses of one period to be matched against the expenses of another periodd)Expenses of one period to be matched against the revenue of the same periodCorrect answer is option 'D'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The Accounting Convention of Matching means:a)Profit for the period to be matched with sales revenueb)Profit for the period to be matched with investmentc)Expenses of one period to be matched against the expenses of another periodd)Expenses of one period to be matched against the revenue of the same periodCorrect answer is option 'D'. Can you explain this answer?.
The Accounting Convention of Matching means:a)Profit for the period to be matched with sales revenueb)Profit for the period to be matched with investmentc)Expenses of one period to be matched against the expenses of another periodd)Expenses of one period to be matched against the revenue of the same periodCorrect answer is option 'D'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about The Accounting Convention of Matching means:a)Profit for the period to be matched with sales revenueb)Profit for the period to be matched with investmentc)Expenses of one period to be matched against the expenses of another periodd)Expenses of one period to be matched against the revenue of the same periodCorrect answer is option 'D'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The Accounting Convention of Matching means:a)Profit for the period to be matched with sales revenueb)Profit for the period to be matched with investmentc)Expenses of one period to be matched against the expenses of another periodd)Expenses of one period to be matched against the revenue of the same periodCorrect answer is option 'D'. Can you explain this answer?.
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