The time period assumption states that the economic life of a business can be divided into

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The time period assumption assumes that the economic life of a business can be divided into artificial time periods, such as weeks, months, or years, for the purpose of preparing financial statements. This allows for easier comparisons between different time periods and for the evaluation of a business's performance over time. However, it does not necessarily imply that the economic activity of a business is truly cyclical or can be divided into equal or perpetual time periods.

The Time Period Assumption States That the Economic Life of a Business