Take Class 12 Tuition from the Best Tutors

  • Affordable fees
  • 1-1 or Group class
  • Flexible Timings
  • Verified Tutors

Search in

Introduction To Accounting: Part 16: Matching Concept

Nishant Kumar
28/06/2017 0 0
  1. Let’s start with an example to understand this concept.

  2. Here it is:

  • Suppose I buy 10 Books for Rs 1,000.

  • This means that 1 Book costed me.

  • Now, if I sell 5 Books at Rs 150 each, I will get?

  • Now, is it correct to say that the total amount that I spent (Cost) was Rs 1,000 and the total amount I earned (Revenue) is Rs 750, and hence I incurred a Loss of Rs 250?

  • Absolutely Not.

  • The logical thing would be to see, at what amount did I buy the Books which I sold.

  • I sold 5 Books for ?

  • I had bought those 5 Books for ?

  • So, I made a profit of ?

  1. What we saw above is Matching Concept.

  2. This concept is very important for correct determination of net profit.

  3. According to this concept, in determining the net profit from business operations, all costs which are applicable to revenue of the period should be charged against that revenue, i.e. deducted from that revenue.

  4. Accordingly, for matching costs with revenue, first revenues should be recognised and then costs incurred for generating that revenue should be recognised.

  5. This concept is based on the Accounting Period Concept.


0 Dislike
Follow 0

Please Enter a comment


Other Lessons for You

Accounting Under Single Entry System-Introduction
Many small, simple business maintain the books of accounts under Single entry system that records bare essentials. In some cases only records of cash, accounts receivable, accounts payable and taxes paid...

Current Ratio and Liquid Ratio
What are current and liquid ratios?

learning by doing
Everyday practice is necessary. If you the gap then you loose the command on subject. Every concept you need to think differently and need to understand throughly. Basics must be vety strong.


Looking for Class 12 Tuition Classes?

The best tutors for Class 12 Tuition Classes are on UrbanPro

  • Select the best Tutor
  • Book & Attend a Free Demo
  • Pay and start Learning

Take Class 12 Tuition with the Best Tutors

The best Tutors for Class 12 Tuition Classes are on UrbanPro

Book a Free Demo

This website uses cookies

We use cookies to improve user experience. Choose what cookies you allow us to use. You can read more about our Cookie Policy in our Privacy Policy

Accept All
Decline All

UrbanPro.com is India's largest network of most trusted tutors and institutes. Over 55 lakh students rely on UrbanPro.com, to fulfill their learning requirements across 1,000+ categories. Using UrbanPro.com, parents, and students can compare multiple Tutors and Institutes and choose the one that best suits their requirements. More than 7.5 lakh verified Tutors and Institutes are helping millions of students every day and growing their tutoring business on UrbanPro.com. Whether you are looking for a tutor to learn mathematics, a German language trainer to brush up your German language skills or an institute to upgrade your IT skills, we have got the best selection of Tutors and Training Institutes for you. Read more