Fundamentals of Accounting – Accounting period concept

As a matter of fact, the income from a business enterprise can be precisely determined only at the end of its life, i.e., when the business is finally closed down. However, in order to have an idea about the progress made by the business and to take remedial measures in time, business income is determined after the expiry of a reasonable period. Such a period is termed as ‘accounting period’, The income disclosed by the Tncome Statement is the income made during the accounting period. However, this is only an interim report. The actual income earned by the business will be known only when the business is finally closed down. Thus, the measurement of accounting income is also subject to the Accounting Period Concept.