What is the time period assumption?

(a) Companies should recognize revenue in the accounting period in which it is earned.

(b) Companies should match expenses with revenues.

(SO 1)

Account Titles and Explanation Action Plan

© Note that adjustments are being made for one month.

© Make computations carefully.

e Select account titles carefully.

© Make sure debits are made first and credits are indented.

150 © Check that debits equal credits for each entry.

500 200 700 1,500

(c) The economic life of a business can be divided into artificial time periods.

(d) The fiscal year should correspond with the calendar year.

AppendixLO1