MaRS Library Fiscal period assumption
A business must provide periodic financial performance reports to investors, creditors and other stakeholders. This information tells the users what the company did during a specific period of time and allows them to gauge the wellbeing of the company. These set periods of time of a company’s life (called fiscal periods) usually extend over an annual basis but can also occcur monthly or quarterly.
The fiscal period assumption is a fundamental principle of accounting. It entails that accounting take place over fiscal periods and that these set segments of time have an equal duration so that meaningful comparisons of progress can be made across different fiscal periods. The fiscal period assumption is also known as the time period concept.
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