A company needs to divide the life of its business into accounting periods in order to provide useful and relevant information to the people who use its financial statements.

Question

Quizplus · Accepted Answer

This practice, known as the periodicity assumption in accounting, allows a company to measure its financial performance and condition in a systematic and regular manner, making the information more useful and relevant for decision-making by investors, creditors, and other stakeholders.

A Company Needs to Divide the Life of Its Business