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
Explain the Money Measurement Concept.
Accounting principles are necessary due to which of the following reasons?
According to this concept, a business firm is treated as a unit separate and distinct from its owners.
It is due to this concept that financial statements are prepared at regular intervals, generally one year.
According to this principle, revenue is deemed to be realised when the goods have been transferred or the services have been rendered to a customer.
What is business entity concept of accounting?
"The capital provided by the owner is treated as a liability of the firm." Explain the concept on which the above depends.
Explain the Dual Aspect Principle.
Why are Generally Accepted Accounting Principles (GAAP) needed?
Explain the complete disclosure principle.
