Why Do Accountants Use the Matching Principle When Deciding How

question 27

Essay

Why do accountants use the matching principle when deciding how to record economic events? Briefly explain the matching principle as it applies to revenues and expenses.

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Definitions:

Goal

A desired result or outcome that a person or organization envisions, plans, and commits to achieve.

Simple Interest

Interest calculated only on the principal amount, without compounding.

Account

A record or statement that details financial transactions and their impact on an entity's financial position.

Guaranteed Annual Rate

The minimum annual return promised to an investor by an investment product, regardless of market conditions.