Why is the time period assumption required?
A)Inflation exists.
B)External users of financial statements want statements that accurately reflect net income or earnings for a specific time period.
C)The dollar is the monetary unit in the United States.
D)The federal government requires it.

Question

Quizplus · Accepted Answer

The time period assumption is required because external users of financial statements want statements that accurately reflect net income or earnings for a specific time period. This assumption allows companies to prepare financial statements that show their financial performance and position over a specific period, such as monthly, quarterly, or annually. Without this assumption, financial statements would be meaningless and difficult to compare over time.

Why Is the Time Period Assumption Required