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unit-12-basic-concepts-relating-to-final-accounts

Unit-12 Basic Concepts Relating to Final Accounts

In this unit you will learn about the basic accounting concepts or principles which guide the preparation of final accounts.

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What is the main implication of the Matching Concept?


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Learning Pundits Content Team

Written on Jun 25, 2019 5:05:59 PM

The Matching Concept thus has the following implications for the ascertainment of profit or loss during a particular period.

1.The costs should relate to the same accounting period as the revenues. For example, when we prepare the Profit and Loss account for 1986, we shall take into account all those incomes that were earned during 1986, and similarly consider only those costs which were incurred in 1986. Any costs or incomes which relate to 1985 or 1987 shall be excluded.

2.All costs included during the accounting period (whether paid or not) and revenues earned during. For the one year (whether received or not) are fully taken into account. 

Only those cost relate to the revenue taken into account. This is the reason why we consider only the cost of goods sold, and not the cost of goods produced during that period.