The length of time for which a business summarizes its financial information and reports its financial performace
Fiscal period
The length of time for which a business summarizes its financial information and reports its financial performance is called the financial reporting period. This period is typically one year, and is referred to as the fiscal year.
The fiscal year is determined by the business and can differ from the calendar year. For example, a fiscal year for a business may run from July 1 to June 30 of the following year. This is commonly referred to as a July 1 fiscal year-end.
During this financial reporting period, the business gathers and records financial transactions that occur, such as revenue earned and expenses incurred. At the end of the fiscal year, the business produces financial statements that summarize the financial transactions that occurred during that period. The financial statements enable stakeholders to analyze and assess the business’s financial performance and make informed decisions.
It’s important for businesses to accurately record and report financial information for each fiscal year. This helps build trust with stakeholders and enables the business to make informed decisions about future financial strategies.
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