Requirements of Accounting Period
1. Accrual Method of Accounting: This method of accounting is a must in the accounting period concept. Accrual method of accounting tells the business to record the expenses and revenues as and when they occur and not necessarily when the monetary transactions happen concerning them. The focus of this method of accounting is to record the transactions irrespective of the time of monetary exchange.
2. Matching Principle: The matching concept states that an organisation should recognise its expenses in the same financial year if the expense is related to the revenue of that year. In simple words, if a firm is earning revenue in an accounting period, even though it incurs the expenses related to that revenue in the next accounting year, the expense will be realised in the same accounting year when the revenue has been realised by the firm.