What happens when revenues and expenses are not recorded in the same accounting period?

When revenues and expenses are not recorded in the same accounting period, it results in an inaccurate representation of net income. This misalignment violates the matching principle, which is a fundamental accounting concept that requires expenses to be matched with the revenues they help generate within the same period. When revenues and expenses are recognized in different periods, it can distort the financial performance of a company by either inflating or deflating net income, thus providing misleading information to stakeholders about the actual profitability and financial health of the business. Accurate timing is crucial for financial statements to reflect true performance, making this choice the most appropriate response.