Accounting Year
The accounting year is the time period during which a company calculates, organizes, and publishes its financial statements. Shareholders and investors compare income statements from this time period to assess financial performance.
An accounting year is typically 12 months long, but when it begins depends on the business.
There are two kinds of accounting years:
Calendar year: A calendar year begins on the first of January and ends on the last day of December.
Fiscal year: A fiscal year begins on any arbitrary date set by the company and ends one year after the start date. During this time, financial information is gathered.
The following fiscal years are commonly used:
- February 1st – January 31st: Retail stores use.
- October 1st – September 30th: Used by the federal government of the United States.
- June 1st – May 31st: Non-profit organizations use this period.
Public sector companies have a three-month accounting period because they must submit reports to the Securities and Exchange Commission four times a year.
