QandAs: Legal

What is a Fiscal Year?

Answer:
A fiscal year is an annual

accounting period. In many areas, the law requires that an annual accounting report every twelve months. However, the twelve month period does not have to be a calendar year.

Because it’s not required that the reporting period is on a calendar year basis, fiscal years vary between businesses and other organizations. Many businesses, churches, and other organizations choose to set their fiscal year from July to June. This makes sense for businesses, such as retailers, who need to focus on their heavy year-end business and not be bogged down with accounting tasks during this same period. Colleges or universities may choose to utilize a fiscal calendar ending in June since it closely reflects a school-year calendar.