The matching principle
An expense is recorded in the same period as the revenue it helped to earn, so that each period shows the true cost of its own sales.
Expense of the period = Cost of what was used to earn that period's revenue
Why it matters
A commission paid on this month's sales belongs to this month even if it is paid next month. Matching puts cost and income side by side, so the profit of a period means something.
Where it appears in a CFO+ model
- In costs that move with sales, such as commissions, delivery and packaging.
- In the income statement, which aligns costs to the period of the revenue.
Learn the concept in the Academy
Activities where it shows up
No figures are published: a definition and a formula only.