The matching principle is an accounting principle that requires expenses to be recognized in the same accounting period as the related revenues they help to generate, ensuring proper matching of revenues and expenses to accurately reflect the financial performance of a business. According to the matching principle, expenses incurred in producing goods or services should be recorded in the same period as the revenues earned from selling those goods or services, regardless of when cash is received or paid. By matching expenses to the revenues they help to generate, the matching principle enables the accurate measurement of net income and provides a more faithful representation of a company's profitability and financial condition. The matching principle is essential for accrual basis accounting, where revenues and expenses are recognized when they are earned or incurred, rather than when cash is received or paid. Proper application of the matching principle ensures consistency, comparability, and transparency in financial reporting, allowing stakeholders to assess the economic performance and sustainability of a business over time.