Asked by: Miloudi Jayantilal
personal finance financial planning

What is periodicity assumption?

Last Updated: 16th September, 2021

Periodicity assumption is the accounting concept that use to prepare and present Financial Statements into the artificial period of times as required by internal management, shareholders or investors.

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In this regard, what is periodicity concept in accounting?

In accounting, periodicity means that accountants will assume that a company's complex and ongoing activities can be divided up and reported in annual, quarterly and monthly financial statements.

Furthermore, what is periodicity with example? noun. Periodicity is the fact of something happening at regularly-spaced periods of time. An example of periodicity is the full moon happening every 29.5 days. YourDictionary definition and usage example.

Subsequently, one may also ask, what is the main purpose of Time Period assumption?

The time period assumption in accounting allows a company's activities to be divided into informal time periods so it can produce financial information which individuals can use to make decisions.

What is going concern assumption?

going concern assumption definition. An accounting guideline which allows the readers of financial statements to assume that the company will continue on long enough to carry out its objectives and commitments. In other words, the accountants believe that the company will not liquidate in the near future.

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What is the prudence concept?

Under the prudence concept, do not overestimate the amount of revenues recognized or underestimate the amount of expenses. You should also be conservative in recording the amount of assets, and not underestimate liabilities. The result should be conservatively-stated financial statements.

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Why periodicity concept is important?

The periodicity assumption is important to financial accounting because it allows businesses to show current performance to investors and creditors for shorter periods of time.

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What is a time period?

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What is a period of time statement?

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What is time period concept?

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Why is there a need to divide the life of the business?

Answer: The time period assumption is also known as accounting time period concept, it says that life of a business can be divided into different time intervals mainly quarter, 6 months or a year. It helps the organization to analyze the things which it has done in the past and take actions according to that in future.

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What is periodicity of a function?

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What is the difference between period and periodicity?

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What is periodicity and why does it occur?

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