MATCHING CONCEPT OF ACCOUNTING

-
ALL ABOUT ACCOUNTING :- 26th BLOG

   ☆☆☆ACCOUNTING☆☆☆

Hi freinds., 🙏

Today's discuss 9th or final concept of accounting....

                                                        So let's discuss .....

   ★ MATCHING CONCEPT :
The matching concept states that the revenue and the expenses incurred to earn the revenues must belong to the same accounting period. So once 1️⃣ the revenue is realised, the next step is to allocate it to the relevant accounting period. This can be done with the help of accrual concept. 

Let us study the following transactions of a business during the month of June 2020.

1. Sale : cash ₹ 1,00,000 and credit ₹ 1,00,000
2. Salaries paid : ₹ 10,000
3. Commission paid : ₹ 5,000
4. Office expanses : ₹ 10,000
5. Transport and forwarding expenses paid : 2,000
6. Interest received : 5,000
7. Rent received : 15,000
8. Raw material purchase : 53,000
9. Wages : 15,000
10. Job work charge paid : 25,000
11. Electricity exp.  : 5,000

Let us record the above transactions in our books 📚 of accounts under the heading of profit and loss account .
   
★ PROFIT & LOSS A/C (P & L STATEMENT) ★
      ☆ EXPENSES☆                      ☆INCOME☆         
 SALARIES : 10,000 SALE A/C : 2,00,000
 cash : 1,00,000
 credit : 1,00,000
 Commission : 5,000 Interest : 5,000
 Office exp. 10,000 Rent : 15,000
 Transport exp. : 2,000 
 Purchase : 53,000 
 Wages : 15,000 
 Job work : 25,000 
 Electricity exp. : 5,000 
 Total :              1,25,000 Total :            2,20,000
Net profit :         95,000                                        
 Total :              2,20,000 Total :            2,20,000

In the above example expenses have been matched with revenue (income) I.e. (Revenue rs.  2,20,000 - expenses rs.  1,25,000) this comparison has resulted in net profit of ₹ 95,000. If the revenue is more than the expenses, it is called profit. If the expenses are more than revenue it is called loss. This is what exactly has been done by applying the matching concept. 

Therefore , the matching concept implies that all revenues earned during an accounting year,  whether received /not received during that year and all cost incurred, whether paid/not paid during the year should be taken into account while ascertaining profit or loss for that year.

* Importance of matching concept in
 accounting :
  • It guides how the expenses should be match with revenue for determining exact profit or loss for a particular period. 
  • It is very helpful for the proprietor, partner, promoters, directors or shareholders to know the axact amount of profit or loss of the business.
 ★ Note :- Matching concept discussed in 13th blog also. https://accountingexpertiseincometaxgst.blogspot.com/2020/06/matching-concept-accounting-principle.html?m=1





Remaining 4 learning section discuss in 27th blog... 
       
                                             So wait ✋ my 27th blog ....

                     __________________________
                          ★★★★★★★★★★
                   -----------------------------------------
               
* Buy some income tax act books :- 
https://www.amazon.in/gp/product/B081X3Z33T/ref=as_li_qf_asin_il_tl?ie=UTF8&tag=mayurthakare21&creative=24630&linkCode=as2&creativeASIN=B081X3Z33T&linkId=d07f15677e03bc6f99e141a23d61eccb

* Buy some printing bill calculators with
 tax :- 

* Buy some computer accessoriessories :- 

                                  ★★★★★

Comments

Post a Comment

Hi freinds 🙏., Pls give your opinion 👌in comment section.,and share this content.🤝🤳

Popular posts from this blog

DUAL ASPECT CONCEPT OF ACCOUNTING

-
Image
ALL ABOUT ACCOUNTING :- 23rd BLOG   ☆☆☆ACCOUNTING☆☆☆ Hi freinds.,  🙏 Today's discuss 6th concept of accounting....                                              So let's discuss .....      ★ DUAL ASPECT CONCEPT :- Dual aspect is the foundation or basic principle of accounting. It provides the very basis of recording business transactions in the books📚 accounts. This concept assumes that every transaction has a dual effect, I.e. it affects two accounts in their respective opposite sides. Therefore, the transaction should be recorded at two places. It means, both the aspects of the transaction must be recorded 🔘 in the books of accounts.                   Thus the duality concept is commonly expressed in terms of fundamental accounting equation 👉                [Assets = Liabilities + capital]   The above accounting equation states that the assets of a business are always equal to the claims 🛄 of owner/owners and the outsiders. This claim is also termed as capital or owners e
Read more

👑 RECORDING CHANGES IN FINANCIAL POSITION👑

-
Image
ALL ABOUT ACCOUNTING : 38th BLOG        💎 💎 ACCOUNTING💎💎 ★ Accounting exercise and practices :   Lesson : 3 [Part : 1] Hi friends  🙏 Today's discuss recording changes in financial position.....                                       So let's discuss .... ♤ RECORDING CHANGES IN FINANCIAL POSITION : The recording of Changes in Financial Position is often referred to as the Cash Flow statement. It provides information about the operating, financing, and investing activities of the company and the effects of those activities on the cash position of the company. ♤ FINANCIAL POSITION IN ACCOUNTING :   The statement of financial position, often called the balance sheet, is a financial statement that reports the assets, liabilities, and equity of a company on a given date. In other words, it lists the resources, obligations, and ownership details of a company on a specific day. * Indicates, with a check mark ☑️ how the following would be recorded : Description of transactions   Deb
Read more

MODEM ACCOUNTING TRENDS [PART : 6]

-
Image
⭐  MODEM ACCOUNTING TRENDS : Hi friends  🙏 Today's discuss sixth accounting trends...                                     So let's discuss ....  6️⃣ BLOCKCHAIN IN ACCOUNTING : Blockchain is an accounting technology. It is concerned with the transfer of ownership of assets, and maintaining a ledger of accurate financial information. ... For accountants, using blockchain provides clarity over ownership of assets and existence of obligations, and could dramatically improve efficiency. The accounting industry needs to understand blockchain technology more and for good reasons. Blockchain is already changing the accounting sector by lowering the costs of reconciling and maintaining ledgers. It also provides the needed accuracy in terms of ownership and history of assets. With blockchain technology, accountants gain a more unobstructed view of their organization’s obligations and available resources. The Big Four in the accounting industry—Deloitte, Price Waterhouse, Ernst Young, an
Read more