Match List – I with List – II.

List – I	List – II
A. Making provision for bad and doubtful debts and for discount on debtors	I. Cost Concept
B. Expenses should be recognised in the period in which associated revenue is recognised	II. Going Concern
C. Assets are not shown at their current realisable value	III. Matching Concept
D. Internally generated goodwill is not recorded in the books of account	IV. Conservatism

Choose the correct answer from the options given below:

Correct option is B

The correct answer is (B) A–IV, B–III, C–II, D–I

Explanation:
• A-IV (Conservatism): The Principle of Conservatism (Prudence) states that one should anticipate no profit but provide for all possible losses. Creating provisions for bad and doubtful debts is a classic application of this concept to ensure assets are not overstated.
• B-III (Matching Concept): This concept requires that revenues and the expenses incurred to earn those revenues must be belonged to the same accounting period. It ensures a true and fair view of the profit or loss.
• C-II (Going Concern): Under this assumption, it is presumed that the business will continue for the foreseeable future. Therefore, assets are recorded at historical cost less depreciation rather than their immediate liquidation or market value.
• D-I (Cost Concept): The Cost Concept (Historical Cost) dictates that an asset is recorded at the price paid to acquire it. Since internally generated goodwill involves no exchange of cash or purchase price, it is not recorded in the books.

Information Booster:
• Accounting principles are divided into Concepts (assumptions) and Conventions (practices).
• Conservatism often leads to the creation of 'Secret Reserves' if applied too strictly.
• The Matching Concept is the foundation for Accrual Accounting.