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Asked by stefanie gacho on May 09, 2024

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

Time Period Assumption

An assumption that accountants can divide the economic life of a business into artificial time periods.

Economic Life

The expected period over which an asset remains useful to its owner or contributes to an enterprise's cash flows.

Artificial Time Periods

A division of operational time into smaller, manageable segments for accounting or reporting purposes, such as quarters or fiscal years.

  • Identify the relevance of the time period assumption in accounting and its influence on financial reporting.
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Rabia BilalMay 13, 2024
Final Answer :
True
Explanation :
The time period assumption is a basic accounting principle that assumes that the economic life of a business can be divided into specific time periods, such as months, quarters, or years, for the purpose of financial reporting. This enables businesses to track their performance over time and produce financial statements that are more useful for decision-making.

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