A fiscal period or fiscal year is defined as a 12 month period in which a business entity will account for all transactions and happenings dealing with that particular company. The 12 month period does not necessarily coincide with the calendar year or January 1st to December 31st.
Fiscal year means that a company is accounting for all occurrences by a company over a year. Usually businesses count their year with that of the calendar year. This makes taxes easier for calculation because taxes are always calculated by the calendar year. The fiscal period concept is used by companies because it is easier to calculate the financials if the company financials resemble the natural business cycle of the company. For example, if a company were to have the end of its busy season come in June, then the company might have its year end on June 30 and its fiscal year beginning on July 1st. For purposes of consolidation a subsidiary must change its fiscal period to mimic the parent company’s period.
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