Although a business concern will run for an unlimited period
of time, the owner of the business and other related individuals want to know
the performance and financial position of the business after certain interval.
For this reason, we have to set up a specific period of time for which the
profit or loss of the business would be calculated. This specific period is
known as accounting period. In the interest of uniformity and comparability
this date is usually decided at an equal interval. Accounting period may be one
year, six months, three months, one month, a week or a day. So, financial
statements of an enterprise are prepared and disclosed periodically showing
performance of this period.
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