Building the Business Case
Solution Matrix Ltd®

Accounting Period Explained
Definition and Meaning

© Business Encyclopedia, ISBN 978-1-929500-10-9. Updated 2016-05-03.

Stages of the accounting cycle are carried out across an accounting period, usually a fiscal quarter or year. The period ends with publication of the period's financial statements.

What is an accounting period?

The Accounting period (Reporting period) is the time period for which a company or organization reports financial performance and financial position. 

Normally the accounting period is defined with respect to the organization's fiscal year.  Typically, four quarterly accounting periods correspond to the organization's fiscal quarters, and an annual accounting period covers the entire fiscal year.

Contents

When are financial reports published for the accounting period?

Several of the primary financial accounting reports or financial statements are published shortly after the end of the accounting period, summarizing activity from the start to the end of the period. For companies in private industry, these reports include the income statement (or profit and loss statement), the statement of changes in financial position (or cash flow statement), and the statement of retained earnings. For government organizations, the report comparable to an income statement may be called a statement of operations, and for some non profit organizations it is called the statement of activities.

The accounting period in view is normally written on these financial statements immediately under the statement title, with a phrase such as...

". . . for the year ended 30 September 2015"

By contrast, the balance sheet (or statement of financial position), reports on the status of asset, liability, and equity accounts at one point in time, the end of the accounting period. The balance sheet title will be followed with phrase such as:

". . . at 30 September 2015"

What are the major accounting activiies performed across the accounting period?

Exhibit 1 below shows stagesof the accounting cycle that are completed in one accounting period.

Exhibit 1. The accounting cycle is completed in each accounting period. Transactions are entered into the journal when they occur, as the first step in the accounting cycle. Journal entries are psoted to a ledger as the second step. Entries are checked with a trial balance and corrected if necessary. The final step shown above is publication of financial statements. However, public companies must also complete the cycle by having reports audited and then filing them with securities authorities.

The accounting period is central to the application of the matching-concept in accounting (reporting revenues earned and the costs and expenses that brought them in the same period), and to accrual accounting, the practice of reporting revenues when earned and expenses when the obligation is incurred, rather than reporting them when cash actually flows.

Publicly held companies (companies that sell shares of stock to the public) are required to publish reports annually, for an accounting period that coincides with their fiscal year. In most countries, this is also the period  (the year) for which tax liabilities are calculated, summarized, and paid.

Many companies also publish financial reports for quarterly accounting periods (three-month periods), for the benefit of shareholders, potential investors, and their own management.

Note that the accounting period fiscal year need not coincide with the calendar year. When a financial statement refers to "FY 2011," for instance, the reference simply refers to the fiscal year ending sometime in calendar 2011. The US government fiscal year ends 30 September 30, the UK government fiscal year ends 31 March, while the Australian government  ends its fiscal year on 30 June. Among companies in private industry, Cisco Systems ends its fiscal year 31 July,  Siemens ends the fiscal year on 30 September, and Hewlett-Packard's fiscal year ends 31 October.

Nevertheless, a majority of companies worldwide (for example, Ericsson, Virgin Media, and IBM) end their fiscal year accounting periods when the calendar year ends, on 31 December.

Published by Solution Matrix Limited. Find us on     Google+   Facebook

Business Case Essentials PDF Ebook

Shop at the Master Case Builder

The premier business case books and tools deliver proven practical guidance for all stages of your case-building project.

Visit the Master Case Builder Shop online. Download Ebooks and software today!

Financial
Metrics Pro

Financial
Metrics
Pro
4th Edition

Excel Ebook & Templates

Handbook, textbook, and live templates in one Excel tool. Comprehensive usage and implementation of ROI, IRR, Working capital, EPS, and 150+ more cash flow and financial statement metrics.

Metrics Pro features the Analyst Workbench & Chairman's View.

Financial
  Modeling Pro

Financial
Modeling Pro
4th Edition

Excel Ebook & Templates

A complete tutorial on building financial models for estimating costs, benefits, and business case results.

Modeling Pro—Live examples & templates for your own models.

Business Case
Guide

Business
Case
Guide
3rd Ed

PDF Ebook.
424 Pages

Clear, practical, in-depth coverage of the case-building process and cost-benefit methods. The standard source for industry, government, and non profit organizations worldwide.

Business Case Guide: Everything you need to know about the business case.

 Business
   Case
   Templates

Business Case
Templates 2016

Templates Package

Integrated Word, Excel, and PowerPoint Template system designed to help you build a professional quality case quickly and easily.

Templates 2016—When you need a real business case.

 

Case Building
Seminars for Business
Professionals


Earn professional education credit while building your case. Download case-building books and software when you register!

Join us for the next class in London, New York, Washington, or Kuala Lumpur.

  Follow Solution Matrix Ltd on Twitter @solmatrix.