Question

Among the ten accounting principles (measurement principle, revenue recognition principle, matching principle, full disclosure principle, going concern assumption, monetary unit assumption, time period assumption, business entity assumption, materiality constraint, ans cost benefit constraint), which one of these ten do you believe is the most important and why. (answer in 12 sentences)

Answer 1

There are general rules and concepts that govern the field of accounting. These general rules–referred to as basic accounting principles.

The phrase "generally accepted accounting principles" (or "GAAP") consists of three important sets of rules: (1) the basic accounting principles (2) the detailed rules and standards, and (3) the generally accepted industry practices.

All ten accounting principles are important as GAAP

Matching principle is most imporatnt, because

This accounting principle requires companies to use the accrual basis of accounting. The matching principle requires that expenses be matched with revenues. For example, sales commissions expense should be reported in the period when the sales were made (and not reported in the period when the commissions were paid). Wages to employees are reported as an expense in the week when the employees worked and not in the week when the employees are paid. If a company agrees to give its employees 1% of its 2017 revenues as a bonus on January 15, 2018, the company should report the bonus as an expense in 2017 and the amount unpaid at December 31, 2017 as a liability. (The expense is occurring as the sales are occurring.)

Because we cannot measure the future economic benefit of things such as advertisements (and thereby we cannot match the ad expense with related future revenues), the accountant charges the ad amount to expense in the period that the ad is run.