Chapter Three

The matching concept

 Reporting of Revenue and
Expenses
There is two methods of reporting revenue
and expense

1.Cash Basis
2.Accrual Basis
 Cash Basis

Under the cash basis for the accounting period concept,

revenues and expenses are reported in the income
statement in the period in which cash is received or paid
 Accrual Basis
Under the accrual basis for the accounting period concept,
revenues are reported in the income statement in the period
in which they are earned.