Matching principle
In one sentenceThe principle that each period bears the expenses that contributed to earning its revenue, so that the period's profit reflects its true result.
Simply put
If you sold in December, the salesperson's commission on that sale is a December expense, even if you pay it in January. This way revenue is matched with its cost in the same period.
It is the basis of the idea of depreciation and of accrued and prepaid expenses.
Worked example
An appliance store pays its salespeople a commission of 5% (for illustration); December sales are 200,000 SAR, and the commission is paid in January.
December sales200,000 SAR
Commission rate (assumed)5%
Commission charged to December (200,000 × 5%)10,000 SAR
Don't confuse it with
Cash basisIt charges the commission to January because it was paid then, which contradicts the matching principle.