Show periodicity concept, Accounting Basics

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Q. Show Periodicity concept?

As per to the periodicity (time periods) concept or assumption an entity's life can be meaningfully subdivided into time periods (such as months or years) to report the results of its economic activities.

Now that you know business transactions and the five basic accounting assumptions you are ready to follow some business transactions step by step. To start we divide Metro's transactions into two groups (a) transactions affecting only the balance sheet in June and (b) transactions affecting the income statement and the balance sheet in July. Note that we could as well classify these transactions as investing, operating or else financing activities as shown in the statement of cash flows.


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