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.