All accounting services are based on the concept of accounting periods — a time span during which specific financial events have taken place. Bookkeeping services, similarly, are offered and carried out every quarter or at the end of the financial year. In the process, they reflect all financial activities that took place during the given time.
According to 3S Synergy Group, “Bookkeeping is at the centre of every successful enterprise. It is valuable for staying on top of your financial records to run your company in an efficient manner.” But, keep in mind that while accounting periods are generically similar, the start and finish dates of these time periods can be drastically different. This is because not every business starts its fiscal year in the month of January. Some may choose to start in April instead. Likewise, not all financial years end in December.
Learning the Cycle
While accounting periods may in terms of reporting dates, they need to be consistent. For instance, if one accounting period ends on March 31, the next year should begin on 1st April. From the investment point of view, any accounting period is important because it allows potential shareholders to make actual comparisons and adjustments for time-sensitive data. If March is generally a good month for selling a particular product the business manufactures, then a decline in sales in March is unacceptable. This is because it will ultimately affect the business’s bottom-line. On the other hand, an increase in sales might lead to a downgrading. It may also be comparable to last March’s financial performance to check its significance.
Preparing Financial Statements
In basic accounting parlance, accounting periods may involve both the preparation of a firm’s external or internal accounts and preparation of financial statements for a given period. The period may be one month for internal accounting procedures or even a quarter comprising ninety days. External accounting periods are generally over a span of 12 months. In other words, it is a quantifiable time segment, such as a quarter, month or week, which a business uses to claim or forecast its business activities.