The time span for which the financial statements are prepared is called an Accounting Period. This period is usually a quarter or an year. This reviews all the financial activities that occurred during that period. The accounting periods of companies may be similar but the start and end dates may differ from company to company. It is not necessary that every company’s fiscal year would start in January. Similarly, not every final quarter of a company would end in December. While these periods may differ in terms of the reporting dates but they should be consistent. For instance, if an accounting period ends on October 31st, the next should start on November 1st.
This period is also known as the reporting period as it reports the financial position and financial performance of a company. Shortly after the accounting period ends, financial statements are published. These statements summarize a company’s activities from the starting date to the end date. These statements may include the profit and loss statement, balance sheet and the retained earnings statement.
Important of Accounting Period
Within a company, accounting period is necessary for analyzing the internal financial performance and make the strategies accordingly. On the other hand, uniform accounting periods are important for comparative analysis between different companies.
It is interesting to know that the accounting period is also called as the reporting period as it reports all the financial reports of a company. Also, the periods have been explained clearly; even the star and end date. This is a very clear blog that can be used as a reference. Thanks author!
It is interesting to know that the accounting period is also called as the reporting period as it reports all the financial reports of a company. Also, the periods have been explained clearly; even the start and end date. This is a very clear blog that can be used as a reference. Thanks author!