Which of the following statements regarding the matching principle is correct?
A)The matching principle is never relevant to tax accounting.
B)The matching principle of financial accounting is an important component of the cash method of accounting.
C)The matching principle of financial accounting is the cornerstone of accrual basis tax accounting.
D)The matching principle of financial accounting is sometimes relevant to timing deductions for an accrual basis taxpayer's recurring items.
E)None of the above.

Question

Quizplus · Accepted Answer

The matching principle of financial accounting is sometimes relevant to timing deductions for an accrual basis taxpayer's recurring items. This means that expenses should be matched with the revenue they helped generate in the same accounting period. While tax accounting does not always follow the same rules as financial accounting, there may be situations where timing deductions correctly based on the matching principle can benefit the taxpayer. Choices A, B, and C are all incorrect statements.

Which of the Following Statements Regarding the Matching Principle Is