The life of a business is divided into equal periods to determine profit or loss for that period. What assumption/concept underlies this procedure?

Question

Quizplus · Accepted Answer

The assumption/concept that underlies this procedure is the accounting period. This concept assumes that the life of a business can be divided into equal and specific time periods, such as months or years, in order to measure the financial performance of the business during that period. This allows the business to accurately determine profit or loss for that specific period and make informed decisions based on that information.

The Life of a Business Is Divided into Equal Periods