As per accounting period principle, we divide whole period of business organization in to twelve month period. End of every twelve months, we make our financial statements. These financial statements show the performance and financial position.
It will be helpful for users of accounting information because they can compare it previous twelve month’s financial profitability and financial position. On this basis, it will be very easy for them for taking important decisions. For example, investors can sell the shares, if he finds that profitability of company is decreasing very fastly in twelve months and if he finds that financial position has become very weak.
New Amendments in this principle of accounting:-
2. Every corporate which is registered in NSE or BSE, has to make their quarterly financial statement and has to publish it in the newspaper. At the end of three months, new income statement and balance sheet will become and will be publish in the newspaper for showing the trend to investors and other interested groups.