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:

Support Department Costs

Expenses incurred by departments that do not directly produce goods or services but provide necessary support to production departments, such as human resources or maintenance.

Production Departments

Specific areas or units within a manufacturing facility where different stages of the production process are carried out.

Budgeted Amounts

Estimated financial figures used for planning during a specific period, including income, expenses, and capital expenditures.

Fluctuations

Variations or changes in level, degree, or value that occur over time.