Which of the following best describes the time period assumption?
A)It assumes we value a business as of the end of every month.
B)It is the cutoff point for asset and liability recognition.
C)It implies that financial statements are prepared at the end of a business entity's operating cycle.
D)It assumes we divide the long life of a business into a series of shorter time periods for accounting and reporting purposes.

Question

Quizplus · Accepted Answer

The time period assumption assumes that we divide the long life of a business into a series of shorter time periods (usually a year or a quarter) for accounting and reporting purposes. This allows for easier analysis of financial performance and comparison over different periods of time.

Which of the Following Best Describes the Time Period Assumption