Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Accounting Period

What it is:

An accounting period is the time interval reflected by the data in a financial statement.

How it works (Example):

Firms prepare financial statements for publication and tax reporting based on an accounting period. Financial statements comprise data generated by a company's operations during the accounting period. The accounting period for publishing financial statements is usually a quarter (e.g. January 1st, 2009 through March 31st, 2009), while the accounting period for tax reporting is usually a year (e.g. January 1st, 2009 – December 31st, 2009).

Why it Matters:

An accounting period is a discrete and uniform length of time which serves as a basis for reporting and analyzing companies' financial performance. The uniformity of accounting periods also allows for comparative analysis between companies.