Question:The idea that a company's life can be divided into distinct time periods so that accounting information can be reported on a timely basis is the: Show
A) Accrual basis accounting B) Time period concept C) Fiscal year concept D) Revenue recognition concept Accounting concepts:Accounting concepts are formed by assumptions, rules, regulations and principles which form the basis of accounting process. The important concepts include business entity concepts, going concern concept, accrual basis concept and matching concept etc. Answer and Explanation: 1The correct answer is b, time period concept. A) Accrual basis accounting Accrual basis of accounting specifies that the revenue must be recorded when it is earned and expense must be recorded when it is incurred rather than recognizing at the time of payment received or payment made respectively. It does not signify the concept of time period in accounting. Hence the option is incorrect. B) Time period concept Time period concept instructs that the entities should furnish and report the financial statements for specific time periods such as quarterly, annually etc. on regular basis. Therefore the option is correct. C) Fiscal year concept Fiscal year concept points to a time period of one year and it is not mandatory that the one year should match with calendar year. Hence the option is incorrect. D) Revenue recognition concept Revenue recognition concept signifies that the revenue must be recorded at the moment it is earned rather than at the time of cash collection. Hence the option is incorrect. Learn more about this topic: Using Accounting Concepts to Make Business Decisions from Chapter 15 / Lesson 10 Businesses sometimes use generally accepted accounting concepts to make business decisions. In this lesson, explore the details of the generally accepted accounting principles, or GAAP. Related to this QuestionExplore our homework questions and answers library
Question:Which of the following best describes the time period assumption? a. It is the cutoff point for asset and liability recognition. b. It assumes we divide the long life of a business into a series of shorter time periods for accounting and reporting purposes. c. It assumes we value a business as of the end of every month. d. It implies that financial statements are prepared at the end of a business entity's operating cycle. Accounting assumptions are a set of principles extracted from either standard business practices or previous transactional experiences. A Standard premise help in maintaining uniformity in the industry. Any deviation from the same should be reported. Answer and Explanation: 1The answer is b.it assumes we divide the long life of a business into series of shorter periods for accounting and reporting purposes. Time period assumption is a concept in which the life of a business can is divided into smaller periods for accounting purposes. For example- if the smaller periods of one year are taken, then all transactions of this one year can be recorded and reported. Such periods can vary for different entities. Learn more about this topic:What Are Financial Statements? - Definition, Purpose & Importance from Chapter 2 / Lesson 1 Learn about the types and importance of financial statements. See the financial statement definition, and study the purpose of financial statements. Related to this QuestionExplore our homework questions and answers libraryPayson Sports, Inc., sells sports equipment to customers. Its fiscal year ends on December 31. The followingtransactions occurred in the current year:Purchased $250,000 of new sports equipment inventory; paid $90,000 in cash and owed the rest onaccount.a.Paid employees $180,300 in wages for work during the year; an additional $3,700 for the current year'swages will be paid in January of the next year.b.Sold sports equipment to customers for $750,000; received $500,000 in cash and owed the rest onaccount. The cost of the equipment was $485,000.c.Paid $17,200 cash for utilities for the year.d.Received $70,000 from customers as deposits on orders of new winter sports equipment to be sold to thecustomers in January of the next year.e.Received a $1,930 utilities bill for December of the current year that will be paid in January of the next year.f.Required:1.Complete the following statements: Get answer to your question and much more What report the long life of a company in shorter periods?accounting chap 3. Is a summary of the operations of a business over a period of time?A profit and loss statement (P&L), or income statement or statement of operations, is a financial report that provides a summary of a company's revenues, expenses, and profits/losses over a given period of time.
What accounting method records income when it's received and records an expense when it's paid?The cash basis of accounting recognizes revenues when cash is received, and expenses when they are paid. This method does not recognize accounts receivable or accounts payable. Many small businesses opt to use the cash basis of accounting because it is simple to maintain.
Which principle requires that cost to be recognized in the same period in which the sale of the related inventory is recorded?Matching principle is especially important in the concept of accrual accounting. Matching principle states that business should match related revenues and expenses in the same period. They do this in order to link the costs of an asset or revenue to its benefits.
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Report the long life of a company in shorter periods
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