Accounting Period

Accounting period is the time span or time period in which certain financial activities and transactions take place is called an accounting period. Most commonly a year of 365 days or a quarter of the year is taken as financial period where financial activities took place. However it also depends on the decision makers of the firm due to this fact the accounting period may vary from firm to firm. However the encompassed time period of an accounting period may be the same for all the businesses and all the firms. However the end and the start date of accounting period vary from one firm to the other. Some firms start their financial year in January and end it in December where as on the other hand other firms end their accounting period in June.

Although the accounting period vary from firm to firm but they are consistent within a firm. For example if a firm ends it financial period at 30^th June and begins the next accounting period at 1^st July it will keep this cycle consistent for each coming year. It is important for a firm that their financial period or accounting period should be consistent as it lets the creditors to analyze the time sensitive data of the firm and helps an investor to invest in the firm on the vases of performance of the certain accounting period. For example if a firm expands its sales in a given month of the accounting period the decrease in the sales will be consider unlucky by the investors.

Other Related Accounting Articles:

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• Financing Activities Definition
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