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A Renewed Interest on the Fundamentals of Accounting: The Impact of the Matching 'Principle' on Earning Attributes

In: Accounting from a Cross-Cultural Perspective

Author

Listed:
  • Pietro Fera
  • Nicola Moscariello
  • Ettore Cinque

Abstract

By adopting a 'revenue/expense' model, the matching principle has traditionally played a fundamental role in determining earnings. However, since the 1970s, standard setters have chosen to move to an 'asset/liability' approach to determine income. Some authors argue that these changes in accounting standards have caused a decline in the matching process, exercising a negative impact on the quality of earnings. A contrasting view, however, is that changes in the economic activity have caused the decline in matching. Moreover, according to Barth, there is no 'matching principle'. Indeed, the matching process often leads to the recognition of assets/liabilities of questionable substance and, therefore, cannot be considered an end in itself. The purpose of this chapter is to perform an extensive and systematic literature review on the determinants and consequences of the matching process, examining a topic of major concern for standard setters.

Suggested Citation

  • Pietro Fera & Nicola Moscariello & Ettore Cinque, 2018. "A Renewed Interest on the Fundamentals of Accounting: The Impact of the Matching 'Principle' on Earning Attributes," Chapters, in: Asma Salman & Muthanna G. Abdul Razzaq (ed.), Accounting from a Cross-Cultural Perspective, IntechOpen.
  • Handle: RePEc:ito:pchaps:141281
    DOI: 10.5772/intechopen.77266
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    More about this item

    Keywords

    accrual accounting; matching principle; revenue/expense model; asset/liability model; earnings attributes;
    All these keywords.

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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