An accounting period is a period in which a set of financial statements are prepared for the determined amount of time for a particular company. Periods for external financial statements take place in a calendar year (January 1 through December 31), which is the most common. This would result in the company having the calendar quarters to be between: January 1st through March 31st, April 1st through June 30th, July 1st through September 30th, and October 1st through December 31st.
Though that might make the most sense to some people, for other companies to have their periods not begin at the start of the year, and end on the last. This is defined as a fiscal year, many of the companies that do this start their First Quarter with July 1st, and their last day being June 30th. This keeps up with the same pace by using a 52- or 53-week fiscal calendar to help keep up with tracking the correct numbers.
Accounting periods are important for the sole purpose of providing those who may be investors, employees, customers, and even suppliers with correct and up to date information to help the credibility of the business. They are used to help for reporting purposes, they help the company look to see what to improve on from either month to month, quarter to quarter, or year to year. This pathway of consistency is what we are building here at Croft and Frost.
By: Chandler Hobbs, Tax Staff at CROFT & FROST