The Periodicity Assumption States That

question 40

Multiple Choice

The periodicity 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 enterprise'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:

Entry Record

The documented recording of a financial transaction in an accounting system.

Sales and Sales Taxes

Revenue from goods or services sold, and the tax collected on these sales, which is remitted to the government.

Gross Earnings

The total income earned by a business before deductions such as taxes, expenses, and costs.

Net Pay

The take-home pay an employee receives after deductions such as taxes and retirement contributions.