The Matching Principle. Why the Matching Principle is Important We started off noting that a $400 lawnmower that is used 100 times does not cost $400 for the first time and then deliver 99 free mowings. Through expense and revenue matching, financial statements can represent more accurate operating results. Financing Fixed Assets With Short-Term Financing. In general, it takes longer for a company to recover its investment in long-term assets. Can cash accounting follow the matching principle? Why the Matching Principle is Important for Small Businesses. This principle helps avoid distortions in financial position and improve the quality of financial statements. In other words, the matching principle recognizes that revenues and expenses are related. This principle ties the revenue recognition principle and the expense principle together, so it is important to understand all three. Why the matching principle is important. The matching principle is a fundamental accounting rule for preparing an income statement. The matching principle is associated with the accrual basis of accounting and adjusting entries. We promised there’d be more. Further, it results in a liability to appear on the balance sheet for the end of the accounting period. Definition: The matching principle is an accounting principle that requires expenses to be reported in the same period as the revenues resulting from those expenses. Why the Matching Principle is Important. The concept states that expenses are to be recognized in the same accounting period as related revenues. We started off noting that a $400 lawnmower that is used 100 times does not cost $400 for the first time and then deliver 99 free mowings. Use Code "Newclient" One of the essential GAAP principles in accounting is the matching principle (or expense recognition). The matching principle is part of Generally Accepted Accounting Principles (GAAP) … The concept of matching … The matching principle directs a company to report an expense on its income statement in the period in which the related revenues are earned. The maturity matching principle is an important consideration for business liquidity and profitability. Why is the matching principle important?View Solution: Why is the matching principle important "Looking for a Similar Assignment? Order now and Get 10% Discount! Businesses must incur costs in … Businesses that finance fixed assets with short-term financing run the risk of a cash flow problem. Matching principle is quite an importance to users of the financial statements especially to understand the nature of expenses that records in the entity’s financial statements. The matching principle states that expenses should show up on the income statement in the same accounting period as the related revenues. 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