Under the accrual basis of accounting, many of the account balances in the ledger at the end of the accounting period are reported in the financial statements without change. some accounts require updating, though. when preparing financial statements, the economic life of the business is divided into time periods. the matching principle states that: (a) a purchase made by a business is matched with the actual cost of the item. (b) the expenses incurred during a period are matched with the revenue that those expenses generated. (c) the transactions of a business are matched with the transactions of its owner, creditors and other businesses. (d) the accounting records and reports are matched with objective evidence.