Which principle requires that expenses should be recognized in the same period as the revenue they helped generate?

The principle that requires expenses to be recognized in the same period as the revenue they helped generate is the Matching Principle. This principle emphasizes the importance of aligning expenses directly with the revenues they produce, ensuring that a company's financial statements accurately reflect its financial performance over a specific period. By matching expenses with revenues, businesses can achieve a more precise representation of profitability, as it allows them to see the true costs associated with generating that income.

The Matching Principle is foundational for accrual accounting, which records revenues when earned and expenses when incurred, rather than when cash changes hands. This approach enables stakeholders, such as investors and management, to make better-informed decisions based on the actual financial position and performance of the business during a given timeframe.

Other principles listed do not specifically address the relationship between expenses and revenues in this manner. The Revenue Recognition Principle focuses solely on when revenue should be recorded, while the Historical Cost Principle deals with recording assets at their original purchase price. Finally, the Economic Entity Assumption maintains that a business's financial activities must be kept separate from those of its owners or other businesses, which is not directly related to revenue and expense recognition.