Andrew Lokenauth on Nostr: 3/ Matching Principle Accrual Accounting follows the Matching Principle: Revenues ...

3/ Matching Principle

Accrual Accounting follows the Matching Principle:

Revenues must match the expenses used to generate them

This means:

• You only expense what you sell

• Unsold goods (like your extra 50 Avocados) go into inventory

• Inventory is an asset until those Avocados are sold

This principle helps businesses understand true profitability—not just cash flow