An accounting period is the length of time over which a business measures and reports its results. It can be a month, a quarter or a full year, depending on what is being reported.
What it means
Dividing time into periods is what lets a business compare performance and meet reporting deadlines. Each period is closed off - balances finalised, statements drawn - and the next begins. Monthly periods support internal management reporting; the financial year is the period for annual financial statements.
Where it fits in
Payroll runs on its own period rhythm tied to pay frequency, but those pay periods roll up into the accounting periods the books are kept in. The accounting period and the tax year need not coincide, which is why a business tracks both.
Key rules
- The span a set of accounts is closed and reported for.
- Can be a month, quarter or year.
- Each period is closed before the next begins.
- Need not align with the tax year.
