The Time Period Assumption States That

question 152

Multiple Choice

The time period assumption states that

• A) a transaction can only affect one period of time.
• B) estimates should not be made if a transaction affects more than one time period.
• C) adjustments to the company's accounts can only be made in the time period when the business terminates its operations.
• D) the economic life of a business can be divided into artificial time periods.

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Definitions:

Flotation Costs

The costs incurred by a company when it issues new securities, including fees for underwriting, legal advice, and registration.

Definition

A statement expressing the essential nature of something or a clear explanation of the meaning of a word or phrase.

Pure Play

A company that focuses on a single type of product or service, without diversification into other areas.