Accounting period - accounting principle, Financial Management

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Accounting Period - Accounting Principle

Accounting period refers to span of time at the end of that and for which the financial statement are prepared to throw light on the results of operations of business during the relevant period and the financial position at the end of relevant period.

Since per the Going concern concept the operations of the business will continue for an indefinite period within the procedure of generation of income. Complete picture of the financial affairs of the business could be available only at time of the liquidation of the business, but this information will be of extremely little use to all of the stakeholder for decision making reasons. In order to provide timely information to all the stakeholders this indefinite period is split into smaller periods which are called as Accounting Period.

Generally the accounting period is of twelve months, but in case of new business, changes in the accounting period, preparation of interim financial statement, etc. The accounting period could be different from twelve month period.


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