A period in financial accounting is a specific duration of time for which financial transactions are recorded and analyzed. Common periods include months, quarters, and fiscal years.
5 Must Know Facts For Your Next Test
Periods help in organizing and summarizing financial data for reporting purposes.
The length of the period can vary depending on the business's reporting requirements.
Transactions must be documented within the correct period to ensure accurate financial statements.
Financial statements are typically prepared at the end of each period to reflect the company's performance.
Period-end adjustments may be necessary to account for expenses or revenues that have been incurred but not yet recorded.
Review Questions
Why is it important to record transactions within the correct period?
What are common durations used as periods in financial accounting?
What types of adjustments might be made at the end of a period?