{"id":416,"date":"2025-01-03T10:28:00","date_gmt":"2025-01-03T10:28:00","guid":{"rendered":"https:\/\/www.experlu.co.uk\/dictionary\/?p=416"},"modified":"2025-03-25T05:51:23","modified_gmt":"2025-03-25T05:51:23","slug":"accounting-period","status":"publish","type":"post","link":"https:\/\/www.experlu.co.uk\/dictionary\/accounting-period\/","title":{"rendered":"Accounting Period"},"content":{"rendered":"\n

As the name suggests, it is the time period for which a business prepares its set of accounts. An accounting<\/a><\/strong> period usually comprises twelve months. However, it can be shorter and longer than 12 months. <\/p>\n\n\n\n

Once businesses establish an accounting period, the accrual method of accounting facilitates consistent reporting between accounting period. <\/p>\n\n\n\n

Under the accrual accounting, income or expense transactions are recorded when they occur. Under cash accounting, transactions are recorded when cash is paid or received.  <\/p>\n\n\n\n

Deciding on an accounting period <\/h2>\n\n\n\n

You can use a calendar year as your accounting period.  <\/p>\n\n\n\n

A better\u00a0approach\u00a0is\u00a0to align the accounting period with\u00a0the\u00a0Financial year. This will\u00a0facilitate efficient\u00a0calculation of taxes<\/a><\/strong>, employee bonus payments and reporting to investors.\u00a0\u00a0<\/p>\n\n\n\n

Usually, the first accounting period is either longer or shorter than the twelve months. This happens as you may not have set up a business on the exact first day of a calendar month, for example.  <\/p>\n\n\n\n

For both company and individual tax purposes, the accounting period cannot exceed 12 months.  <\/p>\n\n\n\n

When does an accounting period begin? <\/h2>\n\n\n\n

An accounting period begins when:  <\/p>\n\n\n\n

\u25cf A business or company is incorporated; or  
\u25cf Immediately after the completion of the previous accounting period.<\/p>\n\n\n\n

When does an accounting period end?<\/h2>\n\n\n\n

At the earliest, the accounting period ends as follows:  <\/p>\n\n\n\n

\u25cf The end date set by the business;  
\u25cf Twelve months after the trade commencement date; 
\u25cf When a business decides to change its accounting period; or 
\u25cf When a business ceases to trade.<\/p>\n","protected":false},"excerpt":{"rendered":"

As the name suggests, it is the time period for which a business prepares its set of accounts. An accounting period usually comprises twelve months. However, it can be shorter and longer than 12 months.  Once businesses establish an accounting period, the accrual method of accounting facilitates consistent reporting between accounting period.  Under the accrual accounting, income or expense transactions are recorded when they occur. Under cash […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[48],"class_list":["post-416","post","type-post","status-publish","format-standard","hentry","category-uncategorized","tag-accounting-period"],"yoast_head":"\nAccounting Period - Experlu Dictionary<\/title>\n<meta name=\"description\" content=\"An Accounting Period is a fixed timeframe for tracking financial transactions and reports. 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