EBK ACCOUNTING PRINCIPLES
EBK ACCOUNTING PRINCIPLES
13th Edition
ISBN: 9781119411017
Author: Weygandt
Publisher: WILEY
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Chapter 3, Problem 1Q

(a)

To determine

Time period assumption: According to time period assumption accountants divide the economic life of a business into artificial time periods.

To explain: Effect of time period assumption on business analysis.

(a)

Expert Solution
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Explanation of Solution

Time period assumption affects accountant’s business analysis in following ways:

  • Recording of transactions in relevant time period.
  • Allocation of costs over the relevant time period.
  • Preparation of the financial statements periodically.

(b)

To determine

To explain: The terms fiscal year, calendar year, and interim periods.

(b)

Expert Solution
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Explanation of Solution

Fiscal year: That time period which starts from first date of a month and ends after completion of 12 months is known as fiscal year. In simple words, the fiscal year is an accounting time period that is one year in length.

Calendar year: The year which starts from January 1 and ends on December 31 is termed as calendar year and many business organizations maintain their accounting period according to the calendar year.

Interim periods: Accounting periods are generally a month, a quarter, or a year. Monthly and quarterly time periods are called interim periods.

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