Commission If an employee earns x % of commission on sales in the current month and the commission is paid the following month, the transaction is recorded in the current month.According to the accounting matching principle, expenses should be documented when the amount is incurred, not when it is paid. They are only referenced when they occur in the statement. Period Expenditures: Commissions, office supplies, and rent are costs that are not immediately related to the product.With The Period and Product Costs, Understand the Matching Concept As a result of the matching concept accounting, the organization's income statement will reflect the associated cost of revenues and income for that time and avoid misstated earnings. It simply means that revenue and production expenses must be computed simultaneously in the accounting period. Accrual accounting follows the practice of matching revenues, i.e., the money earned from selling a product, with expenses, i.e., the cost of manufacturing. The concept of adjustment in accounting applies to accrual accounting. The matching concept implies that expenditure incurred during an accounting cycle should match revenue collected during that timeframe. It necessitates that a company keeps track of its expenses as well as its revenues. The matching principle is an accounting principle that governs how revenues and expenses are recorded.
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