![]() Book expenses directly tied to revenue production in the same period the revenue occurred.Here are three things to remember about the matching principle: For instance, the matching principle works equally well when booking employee wages as it does with equipment depreciation. Matching lets you book expenses that directly connect to revenue and that indirectly affect revenue. If the expense indirectly relates to generating revenue, account for the expense whenever the expense takes place.If the expense directly relates to generating revenue, account for the expense in the same reporting period the revenue is generated.The matching principle depends on the type of expenses your business has incurred: Instead, you’ll simply make a new entry with the latest information. ![]() In other words, you don’t need an industrial-grade eraser to make an entry. You must use adjusting entries at the end of an accounting period to ensure your business’s revenues and expenses are accounted for correctly.īoth adjusted entries and the matching principle help organize information already in your books. The matching principle often works through adjusting entries.
0 Comments
Leave a Reply. |