Asked by Gildardo Ramos on Jun 28, 2024
Verified
Which of the following best describes the time period assumption?
A) It assumes we value a business as of the end of every month.
B) It is the cutoff point for asset and liability recognition.
C) It implies that financial statements are prepared at the end of a business entity's operating cycle.
D) It assumes we divide the long life of a business into a series of shorter time periods for accounting and reporting purposes.
Time Period Assumption
An accounting principle that the life of a business can be divided into discrete time periods, such as months and years, for reporting purposes.
Operating Cycle
The duration of time it takes for a company to purchase inventory, sell the goods, and collect cash from the sale.
- Understand the principle of the time period assumption in the context of accounting.
Verified Answer
KD
Kayla DaltonJul 02, 2024
Final Answer :
D
Explanation :
The time period assumption assumes that we divide the long life of a business into a series of shorter time periods (usually a year or a quarter) for accounting and reporting purposes. This allows for easier analysis of financial performance and comparison over different periods of time.
Learning Objectives
- Understand the principle of the time period assumption in the context of accounting.
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