What principle does the recognition of accrued expenses uphold?

The recognition of accrued expenses is closely aligned with the matching principle. This principle stipulates that expenses should be recorded in the same accounting period as the revenues they help generate. By recognizing accrued expenses, businesses can ensure that they accurately match the expenses incurred during a specific period with the revenues earned, regardless of when the actual cash payment occurs.

This practice allows entities to provide a more accurate picture of their financial performance in their financial statements. For instance, if a company has incurred expenses for services received in one accounting period but has not yet paid for them, recognizing those accrued expenses ensures that the financial statements reflect all liabilities and the corresponding expenses associated with the revenues earned in that same period, thereby promoting transparency and accountability in financial reporting.

In summary, the recognition of accrued expenses directly exemplifies the matching principle, as it emphasizes the alignment of revenues and related expenses within the same timeframe, ensuring that financial performance is accurately represented.