An accounting concept that associates revenue generated in a specific period with all the costs/ expenses incurred or necessary to generate that revenue. Differently stated, it holds that the cost of an asset is to be recognized over the span of time during which it provides economic benefits or revenue to the firm/ business.

The matching principle is an ideal way to recognizing expenses, especially those expenses that can be directly linked to corresponding revenue items. However, and though direct matching is the optimal approach to matching specific items/ accounts, there are cases where indirect matching is required. An example of direct matching is the cost of goods sold associated with sales revenue. On the other hand, indirect matching is usually used to record the economic benefits corresponding to specific types of cost, such as depreciation of long-term, fixed asset (such as building, machinery, etc.)