Matching Principle

In accounting we try to deduct expenses on the income statement during the same month we record the income generated by those expenses.

In May John sold $100,000 worth of equipment and was paid a commission of $5,000. May’s income statement should reflect a gross income of $100,000 and expenses of $5,000 resulting in a profit of $95,000. If the company recorded John’s commission in June, May’s income statement would reflect profit of $100,000, over stating the income by $5,000. His commission expense should be reported in the same month as the income that generated the commission.

https://accounting.uworld.com/cpa-review/lc/accounting-dictionary/term/matching-principle/