Expense recognition definition including break down of areas in the definition. Analyzing the definition of key term often provides more insight about concepts. The expense recognition can be defined as: Prescribes expenses to be reported in the same period as the revenues that were earned as a result of the expense; also known as the matching principle. Expense recognition or the matching principle is an accrual principle and describes when expenses should be recognized, what point in time expenses should be recognized. Expense recognition under an accrual method can be contrasted to expense recognition under a cash concept, expenses being recognized when cash is paid under a cash method but expenses being recognized when they are incurred under an accrual method. The port that an expense is incurred is not as easy to determine but is when we consumed an asset or incurred a liability in order to help generate revenue.
