Periodicity concept, Accounting Basics

Though the results of the operations of an exact enterprise can be termed as precisely only after the business has ceased to control, its assets have been sold off and responsibilities paid off, the knowledge of the outcomes periodically is also essential. Those who are interested in the operating outcomes of a business obviously cannot wait until the end. The needs of these parties, then force the accountant to report the changes in the wealth of a firm for several time periods. Such time periods in actual practice vary, if a year is the most general interval as a result of established business tradition, practice and government needs. Several firms adopt the calendar year and several others the financial year of the government. However more and more firms are changing to the 'natural' business year, the end of that is marked through relatively lower or lowest volume of business activity in the year period.

The custom of utilizing twelve-month period is applied merely for external reporting. The firms generally adopt a shorter span of interval, or as one or may three months, for internal reporting reasons.

The allocation of long-term costs and the complexities related with this process directly stem from such concept. Whereas matching the earnings and the cost of those earnings for any accounting duration, all the revenues and all the costs concerning to the year in question have to be considered in account irrespective of whether or not they have been received in cash, or paid in cash. In spite of the difficulties that arise in allocations and adjustments, short term reports that is: yearly reports are of such significance to owners, creditors, management and other interested parties which the accountant has no choice but to resolve these difficulties. Clearly, the utility of the periodic financial statements outweighs the complexities.

Posted Date: 4/3/2013 5:56:59 AM | Location : United States







Related Discussions:- Periodicity concept, Assignment Help, Ask Question on Periodicity concept, Get Answer, Expert's Help, Periodicity concept Discussions

Write discussion on Periodicity concept
Your posts are moderated
Related Questions
Q. Show Earnings per share? Earnings per-share amounts are based upon the weighted average number of common as well as common equivalent shares outstanding during the year. Com

Ledger is said to be the principal book entry and the transactions can even be directly entered into the ledger account.” Elaborate and explain why journal is necessary.

Explain:- 1. Why would users want to see cash flows broken out into three parts (operating, investing, and financing)? What's the purpose of this structure? 2. Companies often use

If on the opening day of business, you put in supplies worth $250 and $3000 cash, would that be considered a transaction OR would it be considered your beginning balances because

with help of illustrations,comment on final accounts



Workers compensation insurance Workers compensation insurance provides protection for employees who suffer a job-related illness or injury. Entire cost is generally paid by t

the Dwyer corporation incurred costs of 114000 in purchasing a process which it eventually had patented. The patent was issued on July 20x1. To secure the patent, an additional 6

#quthe books of deven verma could not be tallied.the accountant transferred the difference of Rs.1270 in the suspense account on the debit side the following mistakes were found la