expense matching

Expense matching is an accounting principle where costs are recorded in the same period as the revenues they help generate. This ensures that financial statements accurately reflect profitability by aligning expenses with the related income. For example, if a company makes a sale in March, the costs directly associated with that sale—like materials or labor—are also recorded in March, not later. This approach provides a clearer view of financial performance, helping stakeholders understand the true profitability of a period by matching related expenses with the income they produce.