Matching Principle

Definition of 'Matching Principle'

The maturity structure of debt matches the maturity of projects or assets held by the firm.

Short-term assets are financed by short-term debt and long-term assets are financed by long-term debt.

In accounting terms, this means that revenues associated with expenses within a given period shoudl be reported in that same period.

Matching the revenue and expenses means that it is easier to assess the profit or loss of a particular activity.

Related Terms