Mohan purchased goods for Rs. 15,00,000 and sold 4/5^th of the goods amounting Rs. 18,00,000 and paid expenses amounting Rs. 2,70,000 during the year 2005. He paid Rs. 5000 for an electricity bill in December 2004 and advance salaries amounting Rs. 15,000 were paid in the month of January in year 2006. He counted net profit as Rs. 3,50,000. The profit calculated by him is correct according to which of the following concepts?

Under matching concept, only expenses related to current period's revenue should be recognized. Mohan excluded the prior period expense (Rs. 5,000 electricity from Dec 2004) and advance payment (Rs. 15,000 January 2006 salaries), correctly matching only the Rs. 2,70,000 current year expenses to current year revenue. Profit = Rs. 6,00,000 (gross) - Rs. 2,70,000 = Rs. 3,30,000. The stated Rs. 3,50,000 appears to be a typographical error in the question.