Which accounting term assumes that a business's activities can be divided into small segments and that financial statements can be prepared for specific periods, such as a month, quarter, or year?

Question

Augustus Harding

Business

8 March, 16:43

Which accounting term assumes that a business's activities can be divided into small segments and that financial statements can be prepared for specific periods, such as a month, quarter, or year?

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Answers (1)

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Kody Estrada · Answer 1

The correct answer is Time period.

Explanation:

The accounting period refers to the economic operations of a company must be recognized and recorded in a certain time, which is usually a year, which goes from January 1 to December 31, although you can also work with different time periods such as the month, semester, quarter, etc.

This principle assumes that economic operations, as well as the effects of them derived, are accounted for in a way that corresponds to the economic period in which they occur, so that the accounting information clearly shows the period to which they correspond and the result can be determined of each fiscal year.

The accounting period allows us to measure the company's performance when compared to other periods. The accounting period allows one of the main objectives of accounting to be met, which is its usefulness. The accounting information is useful when it can be compared, and it is the accounting period that allows that comparison. It is the comparison that allows accounting information to be analyzed, based on it, making economic and financial decisions.