Question

The Accounting Period Concept requires that financial statements be prepared at regular intervals, even if the business is expected to close soon.

Options

• True

• False

Answer 1

False

Explanation:

The accounting period concept often requires dividing a business’s life into regular intervals (such as a year) for reporting purposes; nevertheless, this requirement is solely based on the assumption of continuity. If a business is already expected to close shortly, the Going Concern assumption fails, and financial statements are issued on a liquidation or realisation basis rather than the ordinary regular accounting period.