Accounting Assumptions

Question 1

Period Assumption

Answer 1

The assumption reports are prepared for a particular period of time, such as a month or a year, in order to obtain comparability of results

Question 2

Accrual Basis Assumption

Answer 2

The assumption we will calculate profit by subtracting expenses incurred from revenue earned in a particular reporting period

Question 3

Going Concern Assumption

Answer 3

The assumption that businesses will continue to operate in the future and its records are kept on that basis

Question 4

Accounting Entity Assumption

Answer 4

The assumption that the records of assets, liabilities and business activities of the entity are kept completely separate from those of the owner of the entity as well as from those of other entities