The accounting convention that requires the continuous life of the business to be divided into time periods of the same length for the purpose of measuring profit, is the:
A) accounting period convention.
B) matching convention.
C) going concern convention.
D) business entity convention.

Question

Quizplus · Accepted Answer

The accounting convention that requires the continuous life of the business to be divided into time periods of the same length for the purpose of measuring profit is the accounting period convention. This convention allows for the preparation of financial statements that reflect the financial performance of the business over a specified period, usually one year. It also enables the comparison of financial statements across different periods and facilitates the monitoring of a company's financial performance over time. The matching convention requires that expenses be matched with revenues for the same accounting period, while the going concern convention assumes that a business will continue to operate indefinitely. The business entity convention requires that the financial transactions of a business be kept separate from the personal transactions of its owners.

The Accounting Convention That Requires the Continuous Life of the Business