1.3 Underlying Assumptions

Traditionally，there are four underlying assumptions：economic entity，going concern，unit of measurement and accounting period.However，IASB emphasizes only one underlying assumption in the Conceptual Framework for Financial Reporting：going concern.

1.Economic Entity

The business enterprise is viewed as a specific economic entity separate and distinct from its owners and any other business unit.For example，China National Petroleum Corporation（CNPC）owns about 82.46% equity of PetroChina Company Limited.[6]Nevertheless，PetroChina Company Limited accounts for its operations as a separate entity and prepares its own financial statements.

2.Going Concern

The going concern assumption reflects accountants' belief that a business will continue to operate“long enough to use its longest-lived asset”，unless there is evidence to the contrary.Thus，a company reports its long-term assets，such as property，plant and equipment，based on their costs rather than the liquidation values.

3.Unit of Measurement

The unit of measurement assumption mandates that the business use a common unit of measurement in accounting for their transactions.This assumption allows financial data to be quantified，summarized，and reported in a uniform，timely，and consistent manner.Traditionally，the unit of measurement is assumed to be a stable monetary unit.Because of this assumption，changes in the purchasing power of money unit resulting from inflation have been ignored.However，many countries with historically high inflation routinely requireinflation-adjusted financial statements.

4.Accounting Period

The profitability of a business cannot be truly assessed until it ceases operations.However，decision-makers demand financial information about business entities on a timely basis.The accounting period assumption allows accountants to prepare meaningful financial reports for ongoing business by dividing their lives into reporting intervals of equal length.List companies regulated by China Securities Regulatory Commission must issue financial statements quarterly，Semiannually and annually.