Which of the following terms best describes the principle of matching expenses with revenues?

The principle of matching expenses with revenues is best described by the accrual basis of accounting. This accounting method ensures that expenses are recognized in the same period as the revenues they help generate, regardless of when cash transactions occur. By aligning expenses with the relevant revenues, the accrual basis provides a more accurate representation of an organization's financial performance over a specific period. This matching principle allows for better accountability and decision-making, as it reflects the economic activities of the business more clearly than other methods.

In contrast, the cash basis records revenues and expenses only when cash is exchanged, which can lead to discrepancies in understanding the actual performance of a business, especially if there are significant receivables or payables. Depreciation relates to the allocation of the cost of tangible assets over their useful lives and is just one example of an expense that needs to be matched with revenue in accrual accounting. Investment analysis involves evaluating the performance of financial investments and is not directly related to the principle of matching expenses with revenues.