What is periodicity assumption?

Jun 16th, 2016
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What is periodicity assumption? Please explain this accounting concept and provide examples when possible. This discussion needs to be at least 300-400 words.

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Running head: PERIODICITY ASSUMPTION EXPLAINEDPeriodicity Assumption ExplainedInstitution AffiliationName1PERIODICITY ASSUMPTION EXPLAINED2Periodicity assumption, also known as Time Period Assumption is an accounting principle thatassumes that the complex and ongoing business activities can be reported in short and distincttime intervals (Strenad, 2010). The time intervals could be monthly, quarterly, semi-annually oreven annually. The business may choose the period to assume. The shorter time intervalsincrease the chances of estimating the money relevant to the period in question. For instance, thetax bill is established on 15th December yearly. On the income statement for the year ended 31stDecember 2015, the property tax bill amount was known; however, on the income statement ofthe five months ended 31st May 2016, the amount is not known and thus estimates are used(Bassler, McCauley, & Gunaratne, 2007).Additionally, on the heading of every income statement, cash flow statement, as well as the stockholders equity statement, it is important that the accountant states the used time interval. Theseshould be correctly labeled stating the date as at which

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