Completing the Accounting Cycle LO 6 – Comparing the Fiscal Year with the Natural Year

Accounting Period  The annual accounting period adopted by a business is known as its fiscal year.  When a business adopts a fiscal year that ends when business activities have reached the lowest point in its annual operation, such a fiscal year is also called the natural business year. LO 6

Accounting Period  Fiscal years begin with the first day of the month selected and end on the last day of the following twelfth month. The period most commonly used is the calendar year.  A corporation may adopt a fiscal year that ends when business activities have reached the lowest point in the annual operating cycle. For example, a ski resort probably would end its fiscal year after the snow season is definitely over. LO 6

Accounting Period LO 6

Financial History of a Business LO 6