Textbook Problem

The matching principle in accounting requires the matching of debits and credits.

To determine

Identify whether the given statement is true or false.

Answer to Problem 1TF

False statement.

Explanation of Solution

Matching principle: According to this principle, the expense should be recognized when it is actually incurred, doesn’t matter, payment is made or not. This principle ensures that the expenses incurred in the current period are matched against the revenues earned in the same period. Matching principle is sometimes called as expense recognition principle.

The matching principle helps in matching the revenue earned during the year with the respective expense incurred to produce the revenue.

Therefore, for the given statement “The matching principle in accounting requires the matching of debit and credits” is false.