The Matching Principle and Earnings Power: Why Matching Remains Relevant

• In Event: Accounting History

Abstract

Since its inception in 1973, the FASB has omitted matching from its Conceptual Framework for Financial Reporting. Nonetheless, forty years later, the matching principle continues to be taught in the classroom and used in practice. The enduring hold matching has had in accounting begs the question of whether or not the matching concept should have a central role in the Conceptual Framework. A literature review of the historical debate followed by an exploration of recent empirical research on the usefulness of matching in predicting future earnings indicates that the debate over matching is not over and the tides may be turning with the use of matching in the AICPA’s proposed private company financial reporting framework.

Author

• Aleksandra Brikman, Case Western Reserve University