The time period assumption assumes that the economic life of a business is divided into artificial time periods.

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Accrual-basis accounting means that companies record events that change a company"s financial statements in the periods in which those events occur, rather than in the periods in which the company receives or pays cash.
Companies make adjusting entries at the end of an accounting period. Such entries ensure that companies recognize revenues in the period in which the performance obligation is satisfied and recognize expenses in the period in which they are incurred.
The major types of adjusting entries are deferrals (prepaid expenses and unearned revenues) and accruals (accrued revenues and accrued expenses).
Deferrals are either prepaid expenses or unearned revenues. Companies make adjusting entries for deferrals to record the portion of the prepayment that represents the expense incurred or the revenue for services performed in the current accounting period.
Accruals are either accrued revenues or accrued expenses. Companies make adjusting entries for accruals to record revenues for services performed and expenses incurred in the current accounting period that have not been recognized through daily entries.
An adjusted trial balance shows the balances of all accounts, including those that have been adjusted, at the end of an accounting period. Its purpose is to prove the equality of the total debit balances and total credit balances in the ledger after all adjustments.
Accounting basis in which companies record transactions that change a company"s financial statements in the periods in which the events occur.
Entries made at the end of an accounting period to ensure that companies follow the revenue and expense recognition principles.
Accounting basis in which companies record revenue when they receive cash and an expense when they pay cash.
The allocation of the cost of an asset to expense over its useful life in a rational and systematic manner.
The principle that companies recognize revenue in the accounting period in which the performance obligation is satisfied.

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An assumption that accountants can divide the economic life of a business into artificial time periods.
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