Matching Concept

The Matching Concept in accounting means that businesses record expenses in the same period as the revenues they help generate. For example, if a company manufactures a product in January and sells it in February, the cost of making the product should be recorded in February, alongside the sale revenue. This ensures that financial statements accurately reflect the company's profitability during a specific period, providing a clearer picture of how well the business is performing. In essence, expenses are matched to the revenues they produce to give a true view of financial results.