Ms. Sandipa is the accounts executive for a company called SS Enterprises. Her job description requires her to supervise the process of recording of the transactions of business and to ensure that all accounting assumptions are taken care of. However, her junior executive is confused about the concepts of the accounting period assumption and the Separate entity assumption.
Answers
As Sandipa's junior executive has less understanding about the separate entity and accounting period assumption, they are explained below.
Explanation:
As Ms. Sandipa is an accounts executive, she has a responsibility to serve her services as a straight link between agencies of advertising and the client. She also has to manage day-to-day activities of SS enterprises.
She also has to take care about all the accounting assumptions, which are:
1. Accrual assumption
2. Accounting period assumption
3. Consistency assumption
4. Economic entity assumption
5. Going concern assumption
6. Conservatism assumption
As her junior executive has less understanding about the separate entity and accounting period assumption, they are explained below:
The accounting period assumption refers to assumption that involves about the actual life of an entity or business. This life is divided into different equal time periods, such as quarter, half year or 6 months or a year.
The separate entity assumption refers to the assumption that involves the transactions recorded by an entity. These are separate from the transactions that are recorder by entity's owners.
Know more here:
1. What is accounting assumptions?
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2. What Are The Accounting Principles, Assumptions, And Concepts?
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