[amp_mcq option1=”Fiscal year” option2=”Calendar year” option3=”Accounting period” option4=”Accrual period” correct=”option3″]
The correct answer is: C. Accounting period
An accounting period is a time span into which the total life of a business is divided for the purpose of preparing financial statements. It is usually 12 months long, but it can be shorter or longer depending on the business. The accounting period is used to track the financial performance of the business over time.
A fiscal year is a 12-month period that is used for accounting purposes. It is not necessarily the same as the calendar year. For example, the fiscal year for a government agency might start on July 1 and end on June 30.
A calendar year is a 12-month period that starts on January 1 and ends on December 31. It is the same as the civil year, which is the year used for general purposes such as scheduling events and keeping track of birthdays.
An accrual period is a time period used for accounting purposes in which revenue is recognized when it is earned and expenses are recognized when they are incurred. This is in contrast to cash basis accounting, in which revenue is recognized when it is received and expenses are recognized when they are paid.
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