matching principle

Definition

The accounting concept that expenses should be recorded in the same period as the revenues they helped generate, because timing matters. It's why you can't expense the entire marketing budget in January even though that's when you paid for it.

Example Usage

Following the matching principle, we capitalize the software development costs and amortize them over the product's useful life rather than expensing everything immediately.

Origin

Fundamental accounting principle codified in early 20th century accounting standards

Fun Fact

The matching principle is theoretically beautiful but practically messy—deciding which expenses match which revenues is where creative accounting thrives.

Source: Generally Accepted Accounting Principles (GAAP)

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