What is the accounting period concept?
An accounting period concept is typically a year consisting of certain financial activities. The purpose of an accounting period is to track the financial performance of a business over a set amount of time. The accounting period concept allows businesses to make decisions about where they need to improve and how they are doing overall.
How does the accounting period work in India?
India has a unique way of accounting for its business periods. The fiscal year in India is April 1 to March 31, which is different from the calendar year used in other parts of the world. This means that businesses in India have two accounting periods each year-the first being April 1 to September 30 and the second being October 1 to March 31. Indian businesses use the April-September period to report their annual results, while the October-March period is used to report quarterly results. This system helps businesses in India track their progress more accurately throughout the year.
What are the types of Annual Accounting Periods?
The two types of annual accounting periods are the calendar year and fiscal year. A calendar year is a time starting January 1st and ending December 31st in the same year, spanning 12 months. It is used as an accounting period for tax purposes, as well as a reference for reporting financial information.
On the other hand, a fiscal year is any 12 months used for financial reporting by a business or organization. It can start on any date within the year and is not necessarily aligned with the traditional calendar year. Fiscal years typically begin in either April or October and end in March or September of the following year, respectively.
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