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We have acknowledged in the previous paragraph that accountants assume enterprise to be in actions in the foreseeable future. Therefore, outcomes of enterprise operations can’t be actually ascertained before the closure of the enterprise operations. But this period is too lengthy and the users of the accounting information can’t await such a long time frame. Hence, the accountants make the assumption of accounting period (also referred to as periodicity assumption). This assumption permits the accountant to divide the lifespan of the enterprise enterprise into completely different time intervals known as ‘accounting interval’ (quarterly, half-yearly, annually) for the aim of preparing monetary statements. Hence, monetary statements are ready for an accounting period and results thereof are reported on periodic foundation.
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