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An accounting period, in bookkeeping, is the period with reference to which management accounts and financial statements are prepared.
In management accounting the accounting period varies widely and is determined by management. Monthly accounting periods are common.
In financial accounting the accounting period is determined by regulation and is usually 12 months. The beginning of the accounting period differs according to jurisdiction. For example, one entity may follow the calendar year, January to December, while another may follow April to March as the accounting period.
The International Financial Reporting Standards allow a period of 52 weeks as an accounting period instead of 12 months. [1] This method is known as the 4-4-5 calendar in British and Commonwealth usage and the 52–53-week fiscal year in the United States. In the United States the method is permitted by generally accepted accounting principles, as well as by US Internal Revenue Code Regulation 1.441-2 [2] (IRS Publication 538). [3]
In some of the ERP tools there are more than 12 accounting periods in a financial year. They put one accounting period as "Year Open" period where all the carried over balances from last financial year are cleared and one period as "Year Close" where all the transactions for closed for the same financial year. Older systems sometimes called these periods "Month 0" and "Month 13". [4]
The 52–53-week fiscal year (or 4–4–5 calendar) is used by companies that desire that their fiscal year always end on the same day of the week. Any day of the week may be used, and Saturday and Sunday are common because the business may more easily be closed for counting inventory and other end-of-year accounting activities. There are two methods in use:
Under this method the company's fiscal year is defined as the final Saturday (or other day selected) in the fiscal year end month. For example, if the fiscal year end month is August, the company's year end could fall on any date from August 25 to August 31. Currently it would end on the following days:
2006-08-26 2006 August 26 2007-08-25 2007 August 25 2008-08-30 2008 August 30 (leap year) 2009-08-29 2009 August 29 2010-08-28 2010 August 28 2011-08-27 2011 August 27 2012-08-25 2012 August 25 (leap year) 2013-08-31 2013 August 31 2014-08-30 2014 August 30 2015-08-29 2015 August 29 2016-08-27 2016 August 27 (leap year) 2017-08-26 2017 August 26 2018-08-25 2018 August 25 2019-08-31 2019 August 31
The end of the fiscal year would move one day earlier on the calendar each year (two days in leap years) until it would otherwise reach the date seven days before the end of the month (August 24 in this case). At that point it resets to the end of the month (August 31) and the fiscal year has 53 weeks instead of 52. In this example the fiscal years ending in 2008, 2013, and 2019 have 53 weeks.
Under this method the company's fiscal year is defined as the Saturday (or other day selected) that falls closest to the last day of the fiscal year end month. For example, if the fiscal year end month is August, the company's year end could fall on any date from August 28 to September 3. Currently it would end on the following days:
2006-09-02 2006 September 2 2007-09-01 2007 September 1 2008-08-30 2008 August 30 (leap year) 2009-08-29 2009 August 29 2010-08-28 2010 August 28 2011-09-03 2011 September 3 2012-09-01 2012 September 1 (leap year) 2013-08-31 2013 August 31 2014-08-30 2014 August 30 2015-08-29 2015 August 29 2016-09-03 2016 September 3 (leap year) 2017-09-02 2017 September 2 2018-09-01 2018 September 1 2019-08-31 2019 August 31
The end of the fiscal year would move one day earlier on the calendar each year (two days in leap years) until it would otherwise reach the date four days before the end of the month (August 27 in this case). At that point the first Saturday in the following month (September 3 in this case) becomes the date closest to the end of August and it resets to that date and the fiscal year has 53 weeks instead of 52. In this example the fiscal years ending in 2011 and 2016 have 53 weeks.
The 52–53 week method is permitted by generally accepted accounting principles in the United States, by US Internal Revenue Code Regulation 1.441-2 [5] (IRS Publication 538)., [6] as well as the International Financial Reporting Standards. [7]
A calendar is a system of organizing days. This is done by giving names to periods of time, typically days, weeks, months and years. A date is the designation of a single and specific day within such a system. A calendar is also a physical record of such a system. A calendar can also mean a list of planned events, such as a court calendar, or a partly or fully chronological list of documents, such as a calendar of wills.
A calendar year begins on the New Year's Day of the given calendar system and ends on the day before the following New Year's Day, and thus consists of a whole number of days.
The French Republican calendar, also commonly called the French Revolutionary calendar, was a calendar created and implemented during the French Revolution, and used by the French government for about 12 years from late 1793 to 1805, and for 18 days by the Paris Commune in 1871, and meant to replace the Gregorian calendar.
The Julian calendar is a solar calendar of 365 days in every year with an additional leap day every fourth year. The Julian calendar is still used as a religious calendar in parts of the Eastern Orthodox Church and in parts of Oriental Orthodoxy as well as by the Amazigh people.
A leap year is a calendar year that contains an additional day compared to a common year. The 366th day is added to keep the calendar year synchronised with the astronomical year or seasonal year. Since astronomical events and seasons do not repeat in a whole number of days, calendars having a constant number of days each year will unavoidably drift over time with respect to the event that the year is supposed to track, such as seasons. By inserting ("intercalating") an additional day—a leap day—or month—a leap month—into some years, the drift between a civilization's dating system and the physical properties of the Solar System can be corrected.
A month is a unit of time, used with calendars, that is approximately as long as a natural orbital period of the Moon; the words month and Moon are cognates. The traditional concept of months arose with the cycle of Moon phases; such lunar months ("lunations") are synodic months and last approximately 29.53 days, making for roughly 12.37 such months in one Earth year. From excavated tally sticks, researchers have deduced that people counted days in relation to the Moon's phases as early as the Paleolithic age. Synodic months, based on the Moon's orbital period with respect to the Earth–Sun line, are still the basis of many calendars today and are used to divide the year.
The Roman calendar was the calendar used by the Roman Kingdom and Roman Republic. Although the term is primarily used for Rome's pre-Julian calendars, it is often used inclusively of the Julian calendar established by the reforms of the Dictator Julius Caesar and Emperor Augustus in the late 1st century BC.
As a moveable feast, the date of Easter is determined in each year through a calculation known as computus. Easter is celebrated on the first Sunday after the Paschal full moon. Determining this date in advance requires a correlation between the lunar months and the solar year, while also accounting for the month, date, and weekday of the Julian or Gregorian calendar. The complexity of the algorithm arises because of the desire to associate the date of Easter with the date of the Jewish feast of Passover which, Christians believe, is when Jesus was crucified.
Dominical letters or Sunday letters are a method used to determine the day of the week for particular dates. When using this method, each year is assigned a letter depending on which day of the week the year starts. The Dominical letter for the current year 2024 is GF.
Calendar reform or calendrical reform is any significant revision of a calendar system. The term sometimes is used instead for a proposal to switch to a different calendar design.
A leap year starting on Wednesday is any year with 366 days that begins on Wednesday 1 January and ends on Thursday 31 December. Its dominical letters hence are ED. The most recent year of such kind was 2020 and the next one will be 2048 in the Gregorian calendar, or likewise, 2004 and 2032 in the obsolete Julian calendar, see below for more.
The determination of the day of the week for any date may be performed with a variety of algorithms. In addition, perpetual calendars require no calculation by the user, and are essentially lookup tables. A typical application is to calculate the day of the week on which someone was born or a specific event occurred.
A leap week calendar is a calendar system with a whole number of weeks in a year, and with every year starting on the same weekday. Most leap week calendars are proposed reforms to the civil calendar, in order to achieve a perennial calendar. Some, however, such as the ISO week date calendar, are simply conveniences for specific purposes.
A perpetual calendar is a calendar valid for many years, usually designed to look up the day of the week for a given date in the past or future.
An accounting period is a period with reference to which United Kingdom corporation tax is charged. It helps dictate when tax is paid on income and gains. An accounting period begins whenever a company comes within the corporation tax charge, and whenever an accounting period ends without the company ceasing to be within the charge. There are a number of rules about when an accounting period ends, and we look at each of these below.
The ISO week date system is effectively a leap week calendar system that is part of the ISO 8601 date and time standard issued by the International Organization for Standardization (ISO) since 1988 and, before that, it was defined in ISO (R) 2015 since 1971. It is used (mainly) in government and business for fiscal years, as well as in timekeeping. This was previously known as "Industrial date coding". The system specifies a week year atop the Gregorian calendar by defining a notation for ordinal weeks of the year.
A fiscal year is used in government accounting, which varies between countries, and for budget purposes. It is also used for financial reporting by businesses and other organizations. Laws in many jurisdictions require company financial reports to be prepared and published on an annual basis but generally with the reporting period not aligning with the calendar year. Taxation laws generally require accounting records to be maintained and taxes calculated on an annual basis, which usually corresponds to the fiscal year used for government purposes. The calculation of tax on an annual basis is especially relevant for direct taxes, such as income tax. Many annual government fees—such as council tax and license fees, are also levied on a fiscal year basis, but others are charged on an anniversary basis.
The 4–4–5 calendar is a method of managing accounting periods, and is a common calendar structure for some industries such as retail and manufacturing. It divides a year into four quarters of 13 weeks, each grouped into two 4-week "months" and one 5-week "month". The longer "month" may be set as the first (5–4–4), second (4–5–4), or third (4–4–5) unit.
The Gregorian calendar is the calendar used in most parts of the world. It went into effect in October 1582 following the papal bull Inter gravissimas issued by Pope Gregory XIII, which introduced it as a modification of, and replacement for, the Julian calendar. The principal change was to space leap years differently so as to make the average calendar year 365.2425 days long, more closely approximating the 365.2422-day 'tropical' or 'solar' year that is determined by the Earth's revolution around the Sun.
The Hanke–Henry Permanent Calendar (HHPC) is a proposal for calendar reform. It is one of many examples of leap week calendars, calendars that maintain synchronization with the solar year by intercalating entire weeks rather than single days. It is a modification of a previous proposal, Common-Civil-Calendar-and-Time (CCC&T). With the Hanke–Henry Permanent Calendar, every calendar date always falls on the same day of the week. A major feature of the calendar system is the abolition of time zones.