How does the time period assumption affect an accountant's analysis of business transactions ?
How does the time period assumption affect an accountant's analysis of business transactions ?
Time period assumption state that business organizations are required to prepare and present their financial statements for a particular period of time.
The time period differs from Industry to industry or business to business, the general time period considered is of One year.
According to the Time Period Principal, transactions that occurred during a particular period of time are recorded and compiled in the books of accounts so as to generate useful information.
The concept of prepaid expenses, outstanding expense, Accrued income, etc. is based on the time period assumption principle.
Due to the time period assumptions, an accountant is able to analyze and interpret the business transactions more effectively and efficiently
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