Which accounting principle states that expenses must be matched with revenues for the same period?

The principle that states expenses must be matched with revenues for the same period is the matching principle. This principle is fundamental in accrual accounting, which aims to accurately reflect a company's financial performance during a given period by ensuring that the expenses incurred to generate revenue are recorded in the same period as the revenues they help to produce.

By adhering to the matching principle, businesses can provide a clearer picture of profitability, as it aligns costs with the revenues they are associated with, enhancing the overall relevance and reliability of financial statements. For example, if a company incurs marketing expenses to drive sales in a particular quarter, those expenses should be reported in the same quarter as the revenues generated from those sales. This alignment helps both managers and stakeholders understand how effectively a company is managing its resources in generating profit.

Other principles, like the consistency principle, focus on maintaining the same accounting methods over time, while the historical cost principle emphasizes recording assets at their original cost rather than current market value. The revenue recognition principle is concerned with when revenue should be recognized in the financial statements, but it does not explicitly address the alignment of expenses with revenues.