![]() There is no direct relationship between these factors and a new building.Īccording to the matching principle, both the commission fees and cosmetic sales must be recorded in the same accounting period. There’s no way to tell if a larger space or better location improves revenue. On a larger scale, you may consider purchasing a new building for your business. They do this in order to link the costs of an asset or revenue to its benefits. Matching principle states that business should match related revenues and expenses in the same period. Matching principle is especially important in the concept of accrual accounting. If there is no cause-and-effect relationship, then charge the cost to expense at once. In some cases, it will be necessary to conduct a systematic allocation of a cost across multiple reporting periods, such as when the purchase cost of a fixed asset is depreciated over several years.
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