During life- time of an entity accountants prepare financial statements at arbitrary points of time as per:a)Prudenceb)Consistencyc)Periodicityd)MatchingCorrect answer is option 'C'. Can you explain this answer?

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During life- time of an entity accountants prepare financial statements at arbitrary points of time as per:

a)
Prudence
b)
Consistency
c)
Periodicity
d)
Matching

Correct answer is option 'C'. Can you explain this answer?

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Test: Accounting Concepts, Principles And Conventions - 1

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During life- time of an entity accountants prepare financial statement...

According to the Periodicity Concept, The accounts should be prepared after every period and not at the end of the life of the entity. This period can be any arbitrary point of time but usually this period is one calendar year. This concept makes the accounting system workable and the term accrual meaningful.

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During life- time of an entity accountants prepare financial statement...

Periodicity Principle in Financial Statements

The periodicity principle is one of the fundamental accounting principles that dictate how often financial statements should be prepared. According to this principle, financial statements must be prepared at regular intervals of time to ensure that stakeholders have timely access to accurate financial information. This principle is also known as the time period principle or the accounting period concept.

Importance of Periodicity Principle

The periodicity principle is important for several reasons:

1. Timely information: Regular preparation of financial statements ensures that stakeholders have access to timely financial information, which is crucial for making informed decisions.

2. Comparison: Preparing financial statements at regular intervals allows for easy comparison of financial performance over time.

3. Compliance: The periodicity principle is a legal requirement in many countries, and failure to comply can result in penalties and legal action.

4. Planning: Regular financial statements allow businesses to plan and forecast future financial performance.

Conclusion

In conclusion, the periodicity principle is an essential accounting principle that ensures timely and accurate financial information is available to stakeholders. By preparing financial statements at regular intervals, businesses can compare financial performance over time, comply with legal requirements, plan for the future, and make informed decisions.

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During life- time of an entity accountants prepare financial statement...

Accountants prepare financial statements at arbitrary points in time in accordance with the periodicity assumption. This assumption is also known as the time period assumption.
The periodicity assumption states that accountants can assume that a company's ongoing activities can be reported at regular intervals, such as monthly, quarterly, or annually. The reporting must be provided consistently for the same time periods to ensure comparability over time.
Accounting concepts are the directions to be followed when dealing with different accounting events. They form the core of all accounting standards and principles.

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During life- time of an entity accountants prepare financial statements at arbitrary points of time as per:a)Prudenceb)Consistencyc)Periodicityd)MatchingCorrect answer is option 'C'. Can you explain this answer?

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