GAAP Comic Strip Part 2
Updated: 5/30/2020
GAAP Comic Strip Part 2
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Storyboard Text

  • That's really interesting. Do you think that this meeting is about one specific GAAP?
  • Maybe
  • I heard Jeff talking about a time period assumption earlier, could that be it?
  • What does it mean?
  • Yes that could be it, Time period assumption is a GAAP principle
  • How long does this usually take?
  • Well it basically say that the life of a business can get divided into equal time periods. The time periods are used by companies to prepare their financial statements.
  • Wow that sounds important.
  • It varies, it can be anywhere from a quarter, six months or a year. It's based on the nature of each business. Another factor is the the need of the users of financial statements.
  • It's very important. Companies use this time to evaluate how successful they have been over a period of time. This makes the balance sheet and income statements for these periods of time and accurate representation of the companies successes and losses. This information is crucial in helping management make decisions about the company. It also informs the government, as well as current and possible investors about the companies financial situation.
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