Accounting period definition
An accounting period is a set period of time for which financial statements are prepared, in order to show clearly what has happened during the period in question. Companies may choose to set their own internal accounting periods in order to track the company’s performance (e.g. doing so on a monthly basis).
Typically accounting periods will also take into account things that have happened during the previous year. This can either be done by calendar year (1st January to 31st December) or fiscal year (April to March), for example.
Accounting periods are useful because they allow the company’s managers to track how well it is doing financially, while they can also be used by potential investors to see how well the company is doing now compared to how well it’s done before. The financial statements that will be prepared to reflect how well the company has performed during the accounting period include the income statement, cash flow statement and balance statement.
Our accounting term glossary has a more detailed breakdown of what each type of statement includes. You can find it here
