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The matching principle is an accounting principle for recording revenues and expenses.
It requires that a business records expenses alongside revenues earned. Ideally, they both fall within the same period of time for the clearest tracking. This principle recognizes that businesses must incur expenses to earn revenues.
A ‘voluntary Liquidation’ is one that is agreed upon by the members/shareholders/ investors of the business. They are effectively the ‘owners’ of the company, and it is they who volunteer to end the company’s existence by passing a special resolution; doing so at a general meeting of the shareholders/members.
There are two types of voluntary Liquidation; a Members’ Voluntary Liquidation (MVL) and a Creditors’ Voluntary Liquidation (CVL). In the former, the directors of the company can and are willing to swear a declaration of solvency (and this can only be sworn if the directors are of the opinion that the company can pay all of its debts (including interest and expenses) within 12 months from the swearing of the document).
An MVL is often referred to as a ‘solvent’ Liquidation, used by the owners of a company (the shareholders/members) to end the ‘legal life’ of it where, for example, the purpose of the company is over, or the owners (who are sometimes also the directors) wish to retire, etc.
The MVL process involves an initial series of decisions by the directors at board meeting, who will agree to swear the declaration of solvency and draft a statement of assets and liabilities, as well as to call a general meeting of shareholders/members who will vote to pass a special resolution to commence the MVL.
The directors will then call a general meeting of shareholders/members, who will vote on the resolutions placed before them, including a special resolution to voluntarily wind up the company.
The creditors are not involved in the process of an MVL, as they will be paid in full (because the company is solvent and all of its debts can be paid by realising and
