What is an Accounting Period/Reporting Period?
Definition and Explanation:
Accounting period (reporting period) is that period for which the organization ascertains its profit or loss. It is customary for most of the businesses to prepare income statement on annual basis, however, they may be prepared for shorter periods as necessary with cost and usefulness are important consideration.
What accounting period an organization follows is dependent on the informational as well as statutory needs of the organization. The most common period followed for preparing an income statement all over the world is a period of one year which may start either from 1st January, 1st April, 1st July or any other date. On the other hand a balance sheet is prepared at the last date of the accounting year to reflect financial position of the organization at the year end.