Question

Under the _______________________________________________, the expenses incurred in generating revenue must be reported in the same period as the related revenue. This is also called the _____________________________. By matching revenues and expenses, net income or loss for the period is properly reported on the income statement. Adjusting entries are required to properly match revenues and expenses

Answer 1

The matching principle states that expenses incurred to generate revenue should be reported in the same period as the related revenue. This ensures accurate reporting of net income or loss on the income statement.

Step-by-step explanation:

Under the matching principle, the expenses incurred in generating revenue must be reported in the same period as the related revenue. This ensures that net income or loss for the period is properly reported on the income statement. Adjusting entries are required to properly match revenues and expenses.