Periodicity assumption, economic entity assumption and recording process

Q. Explain the periodicity assumption and economic entity assumption (June’13).

Periodicity Assumption:  Transactions are recorded in the books of accounts on the assumptions that profits are to be ascertained for a specified period. This is known as Periodicity Assumption of Accounting.

Economic entity assumption: In accounting, an economic entity is one of the assumptions made in generally accepted accounting principles. Basically, any organization or unit in society can be an economic entity.

Examples of economic entities are hospitals, companies, municipalities and federal agencies.

The "Economic Entity Assumption" says that the activities of the entity are to be kept separate from the activities of its owner and all other economic entities.

Reference: http://en.wikipedia.org

Q. Identify the basic steps in the recording process (June’13).

Or. What are the steps in the recording process in accounting?

Basic steps in the recording process: The basic steps in the recording process are identify and analyzing transaction and events

Þ    Recording in journals

Þ    Posting to the ledger

Þ    Unadjusted trial balance

Þ    Adjusting entries

Þ    Adjusted trial balance

Þ    Financial statement

Þ    Closing entries and

Þ    Post closing trial balance

Reference: http://wiki.answers.com

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