Accounting Period Assumption
The users of financial statements require review reports to know the prepared result and the financial situation of the business apprehension. Hence it becomes essential to close the accounts at usual intervals. Typically a period of 365 days or 52 weeks or 1 year is measured as the accounting period. The time period statement enables business organizations to stop and see how thriving they have been in achieving their objectives throughout a exacting period of time and where the room for development exists.
The accounting period assumption allows for the allotment of businesses prepared activities into simulated time periods for reporting purposes as determined by the business owners. This assumption allows assigning revenues and expenses to a particular accounting period. An accounting period can be of any duration. For comparison purposes, financial statements are typically organized for an accounting period of the equal duration.