Question

Explain the purpose of the Matching method for an exporter.

Answer 1

Matching principle is one of the basic guidelines in accountancy. In order to determine the correct profit made by the business during and accounting period, it is necessary that the revenues of that period should be matched with the expenses for that particular period.the following things should be kept in mind while matching cost with revenue:

1) Outstanding expenses should be shown as expenses in profit and loss account.

2) Prepaid expenses should not be included in expenses of the current accounting period.

3) Accrual income and incomes received in advance should not be shown in the profit and loss account

4) the closing stock is carried over to the next period as opening stock.

Matching principle helps to give an accurate appraisal of the result for the business operations and it also improves the quality of financial statements of the business. From the exporters point of view , it helps to avoids the foreign exchange risk, bank charges related to Foreign currency. With matching principle concept it is more helpful for an exporter to exchange his goods And services and receive his income in a more easy and convenient way.