Accounting Period Explained

When we talk about accounting period for the purpose of financial statements, we are referring to the time period printed at the top of the financial statement.

This can be whatever period of time you select when you produce that financial statement. For example, maybe you are looking at the previous month, the previous year or any other time period that you would like to review.

On a Profit and Loss Statement, you select the first and last date of the time period you would like to review. On a balance sheet you select one date and review all assets, liabilities and equity as of that given date.

The accounting tax period is a 12 month period, at the end of which you close your books and file your taxes. This 12-month cycle can be a calendar year or a personally selected 12-month fiscal year.

Related terms you should understand the meaning of:

Accounting Cycle

Accrual vs Cash Basis

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