The life of a business is divided into specific time periods,usually a year, to measure results of operations for eachsuch time period and to portray financial conditions at theend of each period.(a) This practice is based on the accounting assumptionthat the life of the business consists of a series of timeperiods and that it is possible to measure accuratelythe results of operations for each period. Commenton the validity and necessity of this assumption.(b) What has been the effect of this practice on accounting?What is its relation to the accrual system?What influence has it had on accounting entries andmethodology?
The life of a business is divided into specific time periods,usually a year, to measure results of operations for eachsuch time period and to portray financial conditions at theend of each period.(a) This practice is based on the accounting assumptionthat the life of the business consists of a series of timeperiods and that it is possible to measure accuratelythe results of operations for each period. Commenton the validity and necessity of this assumption.(b) What has been the effect of this practice on accounting?What is its relation to the accrual system?What influence has it had on accounting entries andmethodology?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The life of a business is divided into specific time periods,
usually a year, to measure results of operations for each
such time period and to portray financial conditions at the
end of each period.
(a) This practice is based on the accounting assumption
that the life of the business consists of a series of time
periods and that it is possible to measure accurately
the results of operations for each period. Comment
on the validity and necessity of this assumption.
(b) What has been the effect of this practice on accounting?
What is its relation to the accrual system?
What influence has it had on accounting entries and
methodology?
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