Which accounting principle is followed when recognizing increases in liabilities?

The accrual basis of accounting is the principle that supports recognizing increases in liabilities. Under this principle, revenues and expenses are recorded when they are earned or incurred, regardless of when cash is actually exchanged. This approach ensures that all financial events are reflected in the financial statements in the period they occur, providing a more accurate picture of a company's financial position.

In the context of liabilities, this means that if a company incurs an obligation, such as receiving goods or services on credit, the liability is recognized immediately when the obligation is created, not necessarily when the cash payment is made. This principle is fundamental in portraying a complete picture of a company's obligations and resources, aligning with the broader goal of transparency and accurate financial reporting.

The other choices relate to different specific accounting principles. The matching principle, for instance, deals with aligning expenses with the revenues they help generate in the same period. The revenue recognition principle is focused on recognizing income when it is earned, while the cost principle pertains to recording assets at their cost rather than their current market value. None of these principles directly address the recognition of increases in liabilities in the same way that the accrual basis does.