Final answer:
The periodicity assumption is used to divide a company's economic life into time periods for financial reporting, which facilitates consistent and comparable financial statements.
Step-by-step explanation:
The assumption that divides the economic life of a company into time periods for financial reporting is known as the periodicity assumption. This assumption enables businesses and accountants to provide timely and structured financial information to stakeholders, such as investors, by reporting the company's financial performance and position at regular intervals, usually annually, quarterly, or monthly. It assumes that a company's complex and ongoing activities can be divided into shorter, artificial time periods to create comparable financial statements.