Time Period Assumption
Definition
The convention that a business's life can be divided into regular reporting periods so performance can be measured and compared, even though many activities span period boundaries.
Related Terms in Accounting Principles
Accounting Standards
The authoritative rules governing how transactions are recognised, measured and disclosed in financial statements, such as IFRS, US GAAP and national standards. They make financial reports consistent and comparable.
Golden Rules of Accounting
Traditional rules for recording entries by account type: debit the receiver and credit the giver (personal), debit what comes in and credit what goes out (real), and debit expenses and losses and credit incomes and gains (nominal).
Nominal Account
An account for incomes, expenses, gains and losses, closed to the profit and loss at period end. It contrasts with real accounts (assets) and personal accounts (people and entities).
Real Account
An account for assets and property whose balance carries forward from one period to the next rather than being closed to profit and loss. Examples include cash, inventory and equipment.
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