In accounting we usually assume that a business will be able to maintain its operations for the long run (Going Concern). Although this assumption is useful, in order to analyze the financial and economic conditions of an entity we must make periodic assessments. The Time Period Assumption in accounting allows us to do this by dividing the life a business into artificial time periods. As a result of this, companies are able to get timely feedback and come to conclusions about the companies performance. These assumptions allow companies to create quarterly and annual financial statements.
