The time period assumption states that
A) a transaction can only affect one period of time.
B) estimates should not be made if a transaction affects more than one time period.
C) adjustments to the company's accounts can only be made in the time period when the business terminates its operations.
D) the economic life of a business can be divided into artificial time periods.

Question

Quizplus · Accepted Answer

The time period assumption assumes that the economic life of a business can be separated into artificial time periods, such as monthly or yearly periods, to provide useful information for financial reporting. This allows for transactions to be recorded and reported in the period in which they occur, even if their effects extend beyond that period. Therefore, choice D is the correct answer.

The Time Period Assumption States That