Fiscal Year
Table of Contents:
Definition of Fiscal Year
A fiscal year is a 12-month accounting period used by businesses, organizations, and governments for financial reporting and budgeting purposes.
It does not necessarily align with the calendar year and can begin on any date. During the fiscal year, financial transactions, revenue, expenses, and other financial activities are recorded and summarized to assess the entity's financial performance and make informed decisions about future operations.
What is Fiscal Year?
A fiscal year is a period of 12 consecutive months used by entities for accounting and financial planning.
It is commonly employed by businesses, government agencies, and non-profit organizations to track their financial activities over a specific timeframe.
Unlike the calendar year, which starts on January 1st and ends on December 31st, a fiscal year can begin on any date and extend for 12 months from that starting point. The fiscal year's choice often depends on an entity's specific requirements, industry norms, or legal regulations.
For example, a company operating from July 1st to June 30th may have a fiscal year that runs from July 1st of one year to June 30th of the following year.
The use of fiscal years allows entities to better align financial reporting with their operational cycles and facilitates consistent financial analysis and planning.
