1085. CBSE Accounts for Class XI - Matching Principle of Accounting
Arinjay Jain Academy
2015-07-10
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2. According to the Matching Concept for Revenue, cost incurred to earn revenue is recognized as an expenditure only during the period when the revenue is recognized as having been earned, i.e , we match the expenditure to the related revenue. This has three aspects : -
• As revenue is recognized as income, related expenditure is considered as an expense in the profit and loss account;
• Expenses pertaining to revenue, which are to be earned in next accounting period are carried forward as deferred expense in Balance Sheet and treated as an expense only in next year;
• Advance revenue received is to be treated as income in the year when the corresponding services are provided or property in goods is transferred.
• As revenue is recognized as income, related expenditure is considered as an expense in the profit and loss account;
• Expenses pertaining to revenue, which are to be earned in next accounting period are carried forward as deferred expense in Balance Sheet and treated as an expense only in next year;
• Advance revenue received is to be treated as income in the year when the corresponding services are provided or property in goods is transferred.
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