What is an accounting period?

The accounting period is the time period to which the financial statements or the set of financial statements are applied. For example, when people get a statement from a bank, a statement often says something like a "accounting period: 5/31-6/31" to understand which period the statement is concerned. Accounting periods can have different lengths and are used in a number of different contexts.

The classic example of the accounting period is the calendar year. The calendar year is used as an accounting period for the purposes of taxation in many countries. A statement from this period is used to determine tax liability, balance of income compared to various tax deductions that reduce liability. People can also use a fiscal year, depending on how their accounting systems are organized as an accounting period, especially in assessing financial health within the audit. These e -decorations are often used for internal accounting, the purpose of which is to monitor financial health and pay attention to problems. In these cases, only a limited number of people can perceive internal accounts.External accounts, such as accounts that publicly traded companies have to submit by law to complete publication, are often filed quarterly and annually.

Accounting periods are used for profit and loss statements, account statements and many other types of financial records. These documents reveal a number of financial activities that took place during the accounting period. For example, a bank statement will present deposits, selections, fees and interest rates on your account. The bank can also send an annual statement that includes all financial activity for a year that can be checked against the monthly statement for accuracy.

Financial documents usually include the accounting period somewhere near the document topic because this information is important. Readers must know about the time frame that surrounds the document they look at, and they may also have to know specifically when the document has been generated. That tooallows people to compare the accounting period for financial health assessment; For example, the restaurant might want to compare and compare profits of the third quarter for different years to determine whether the company is growing and prospering according to the intended, and to estimate the level of growth of the facility.