Answer
a) The time period assumption refers to the principle that business's ought to report financial statements according to a specific (artificially set) time frame. Since many business transactions do not rigidly fit perfectly into these artificially set time frames, it is the job of an accountant to analyse and allocate the impact these transactions have in each accounting period.
b)An accounting period that is exactly one year long.
Work Step by Step
a) The time period assumption means that accounting is done according to artificially set time periods. Since many business transactions do not necessarily occur rigidly within these time periods, an accountant must analyse the revenue and expenses of a company (according to the revenue recognition principle and matching principle) and quantify the impact of these highly variable business transactions into each accounting period, via adjusting entries.
b)A fiscal year relates to an accounting period of one year. During this time period accountants are expected to analyse and aggregate accounting functions and report by the end of it.
