What is Matching Principle?

The Matching Principle is a fundamental accounting concept that requires expenses to be recorded in the same period as the revenue they generate. In the context of construction, this means that costs incurred during the construction process should be matched with the revenue generated from the completed project. For example, if a construction company incurs expenses for materials, labor, and equipment rental during the construction of a building, those costs should be recognized as expenses in the same period that the revenue is recognized from the sale or lease of the completed building. This ensures that the financial statements accurately reflect the true cost of generating revenue from the construction project.By following the Matching Principle in construction accounting, companies can provide stakeholders with a clear and accurate picture of the financial performance of their projects. This principle