Reporting the information on the income statement and the statement of owner's equity over a period of time and the balance sheet as of a specific date is complying with the
A)going concern assumption
B)periodicity of income assumption
C)monetary unit assumption
D)the time value of money principle

Question

Quizplus · Accepted Answer

The periodicity of income assumption requires that financial statements be prepared for specific periods of time, such as months or years. To comply with this assumption, the income statement and statement of owner's equity are prepared for a specific period of time, while the balance sheet is prepared as of a specific date. Therefore, option B is the correct answer. The going concern assumption refers to the assumption that a business will continue to operate indefinitely, while the monetary unit assumption assumes that financial transactions are recorded in a stable currency. The time value of money principle relates to the concept that the value of money changes over time due to inflation and interest rates.

Reporting the Information on the Income Statement and the Statement