The Period Assumption

All entities need to report their results in the form of either proft or operating surplus. Proft is determined for particular periods of time, such as a month or a year, in order to get comparability of results.

There are also statutory requirements for entities to determine periodic proft fgures, such as for taxation. This division of the life of the entity into equal time intervals is known as the period assumption.

As a result of this assumption, proft determination involves a process of recognising the income for a period and deducting the expenses incurred for that same period