The matching concept is an accounting practice whereby expenses are recognized in the same accounting period as the related revenues are recognized.
The principle that requires a company to match expenses with related revenues in order to report a company's profitability during a specified time interval. Ideally, the matching is based on a cause and effect relationship: sales causes the cost of goods sold expense and the sales commissions expense. If no cause and effect relationship exists, accountants will show an expense in the accounting period when a cost is used up or has expired. Accrual accounting is an accounting method that measures the performance and position of a company by recognizing economic events regardless of when cash transactions occur. Updated 2015-09-24. The matching concept is one of the primary differentiators between accrual accounting and cash basis accounting. With the matching concept, revenues are reported along with the expenses that brought them in the same period. The matching concept is an accounting practice whereby expenses are recognized in the same accounting period as the related revenues are recognized. The period's revenues, that is, are reported along with the expenses that brought them. The matching concept thus helps avoid misstating earnings for a period. In the US, accounting concepts such as the matching concept and accrual accounting are recognized in the GAAP (Generally Accepted Accounting Principles) and the organizations behind GAAP (e.g., the Financial Accounting Standards Board, FASB). Matching principle is relevant to the time period assumption, the revenue recognition principle and it is at the heart of accrual basis of accounting.
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matching process accounting definition