Question

What does the Matching Principle state regarding cost in accounting?

A) Cost is directly linked to revenues.
B) Cost cannot be linked to revenues.
C) Cost is linked to a specific accounting period.
D) Cost should always be minimized.

Answer 1

The Matching Principle in accounting states that the cost should be linked to a specific accounting period.

Step-by-step explanation:

The Matching Principle in accounting states that the cost should be linked to a specific accounting period. This means that the expenses incurred in producing goods or providing services should be recognized in the same period as the revenues generated from those goods or services. The purpose of this principle is to accurately match the costs with the corresponding revenues to provide a true representation of the company's financial performance.