Chapter 12, Problem 1UTI

To determine

Interim Period and Annual Period:

Interim Period is basically defined as financial reporting period which is lesser than the full fiscal year.

Annual Period covers the total period of the year. Annually period can be defined as a period between January to December.

Benefits of viewing interim period as integral part of annual period rather than separate distinct period.

Answer to Problem 1UTI

There are many benefits of viewing interim period as whole rather than separate distinct period. All transactions pertaining to that period can be combined and viewed as whole rather than transactions for distinct period.

Explanation of Solution

Benefits of viewing interim period as an integral part of larger annual period:

There are several benefits in viewing an interim period as in integral part of larger annual period.

Some of the benefits can be as follows:

• There are more meaningful productions of annual results as the result of allocating the information on the expenses.
• Special accounting treatment is given to those interim conditions, which do not exist at the year end.
• The annual amounts will be vague if special accounting treatments are not available.