Advertisements
Advertisements
प्रश्न
Explain Matching Concept of GAAP.
Advertisements
उत्तर
- According to this principle, the cost of a particular period should be charged from the revenue of the same period only. Only such matching of cost and revenue can reveal the true profit or loss for a period. Revenue must be ascertained first for a period, and then the cost of that period should be charged to it.
- When cost is associated with a particular product or service, revenue earned from that product or service should be matched to its cost.
- This principle provides the guidelines as to how the expenses are to be matched with revenue. It requires that in determining the net profit, all costs which are applicable to revenue of that period should be charged against that revenue.
- For matching costs with revenue, revenues should first be recognised, and then costs incurred for generating that revenue should be recognised. The matching of costs with revenue is based on the accrual system of accounting.
APPEARS IN
संबंधित प्रश्न
The retirement of manager of the company cannot be recorded in the book of accounts, because it is not possible to estimate the financial effect of retirement. Which accounting principle would be applicable for the above statement?
Explain the concept of The Dual Aspect Principle.
Accounting principles are necessary due to which of the following reasons?
______ is the language of business.
It is due to this concept that financial statements are prepared at regular intervals, generally one year.
What is meant by going concern concept of Accounting.
With reference to the concept of accounting only those transactions are recorded in accounts which can be expressed in terms of money. Justify either for or against.
Explain any two basic concepts of accounting.
Explain the complete disclosure principle.
Explain the principle of consistency.
