How Does GAAP View Interim Accounting Periods

question 10

Multiple Choice

How does GAAP view interim accounting periods?

• A)As discrete units for which net income may be separately determined
• B)As integral units of the entire year for which each interim period is an essential part of an annual period
• C)As integral units of the entire year with each interim period as an independent accounting period
• D)As discrete units of the entire year using the same principles that are applied to the annual period

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Definitions:

Cost Index

An index that measures the change in the cost of a basket of goods or services over time, often used in business and economics to track inflation or deflation.

Inventory-Pool Method

A technique in accounting used to group similar inventories together to simplify valuation and cost calculations.

Dollar-Value LIFO

A variation of the last in, first out (LIFO) method that measures and adjusts inventory layers in terms of dollar value rather than physical count.

Cost Index

A measure that tracks the change over time in the cost of a fixed basket of products and services, typically used for inflation adjustment or to adjust the value of a contract.