process of reporting expense on a cause-effect basis against the reported revenue it relates to. Net income is measured by the difference between revenue over associated expenses during the same period. Expenses are incurred in order to obtain that revenue. An example is the matching of sales commission expense to sales.
requiring assets and liabilities of an insurance company to go up or down together on a proportional basis. The duration of the asset and liability should be approximately the same. For example, an insurance policy of 12 months in duration should be identified with an asset that matures in 12 months. As interest rates go up, thereby requiring the insurance company to pay a higher return to its policyholders, the interest earned on investments should go up on a proportionate basis.
