Glossary · Also called Accruals concept
Matching concept
The rule that income and the costs of earning it should be recorded in the same period.
What it means
The accounting principle that expenses are recognised in the same period as the revenues they help to generate.
Example
Accruals and prepayments exist to match costs to the right period.
Why it matters
It is why profit reflects the period's true performance rather than just cash movements.
In practice
The matching concept drives many of the adjustments you make before drawing up the income statement. It is why accruals and prepayments exist. You match the expenses of a period against the revenue earned in the same period, whenever the cash actually moved.
For example, rent of RM12,000 covers the year, but only RM9,000 has been paid by the year end. You still charge the full RM12,000 to the income statement. The unpaid RM3,000 is carried as an accrued expense (a current liability).
The concept also explains why closing inventory is deducted from purchases. Only the cost of goods actually sold is set against sales.
Do not confuse the matching concept with the accruals concept. They overlap and are often taught together. Matching stresses pairing costs with the income they help earn. Accruals stresses recording income and expenses when they arise, not when cash is received or paid.
If you often miss the year-end adjustments, one of our teachers can work through them with you, using the timing of each item. Book a trial class.
Related terms
Syllabus reference: Cambridge 0452 and 0985, syllabus for 2027 to 2029, sub-topic 4.3 Other payables and other receivables (page 14); sub-topic 7.1 Accounting concepts (page 19).
Definitions here are general accounting explanations for study. For your board's exact wording, see its official syllabus via Sources.
Need matching concept explained properly?
Tell us your child’s year and board on WhatsApp and we will suggest a first lesson. One-to-one and online, from RM75/hr.
One-hour paid trial · Same-day reply