Can cash accounting follow the matching principle? In general, it takes longer for a company to recover its investment in long-term assets. Further, it results in a liability to appear on the balance sheet for the end of the accounting period. Why is the matching principle important to financial reporting? Why the Matching Principle is Important. This is important in calculating the cost of owning the lawnmower, and it is important in calculating business income. Financing Fixed Assets With Short-Term Financing. The maturity matching principle is an important consideration for business liquidity and profitability. Businesses that finance fixed assets with short-term financing run the risk of a cash flow problem. Use Code "Newclient" The matching principle is associated with the accrual basis of accounting and adjusting entries. Businesses must incur costs in … Why the Matching Principle is Important for Small Businesses. The matching principle is a fundamental accounting rule for preparing an income statement. We started off noting that a $400 lawnmower that is used 100 times does not cost $400 for the first time and then deliver 99 free mowings. Why the matching principle is important. The concept of matching … This principle helps avoid distortions in financial position and improve the quality of financial statements. We promised there’d be more. The Matching Principle. Why the Matching Principle is Important We started off noting that a $400 lawnmower that is used 100 times does not cost $400 for the first time and then deliver 99 free mowings. The matching principle states that expenses should show up on the income statement in the same accounting period as the related revenues. Order now and Get 10% Discount! The concept states that expenses are to be recognized in the same accounting period as related revenues. According to the matching principle all the revenues should be matched with the expenses in which they are received and all the expenses should be matched with the revenues in the same period in which they are incurred. The matching principle directs a company to report an expense on its income statement in the period in which the related revenues are earned. Definition: The matching principle is an accounting principle that requires expenses to be reported in the same period as the revenues resulting from those expenses. The matching principle is defined as the fundamental concept of accrual basis accounting that offsets revenue against expenses on the basis of their cause-and-effect relationship. Why is the matching principle important?View Solution: Why is the matching principle important "Looking for a Similar Assignment? 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