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Simple English definitions for legal terms
fiscal period
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A quick definition of fiscal period:
A fiscal period is a specific period of time used for accounting purposes. It can be a calendar year, which is 12 months from January 1 to December 31, or any other consecutive 365-day period. A fiscal year is often different from the calendar year, especially for tax purposes. A tax year is the period used for computing federal or state income-tax liability, usually either the calendar year or a fiscal year of 12 months ending on the last day of a month other than December.
A more thorough explanation:
A fiscal period is a specific period of time used for accounting and financial reporting purposes. It can refer to:
- Fiscal year: A 12-month period used by a company or organization for financial reporting. It may or may not align with the calendar year.
- Half-year: A period of 182 days used for legal computation.
- Natural year: The period of 365 days and about 6 hours, or the time it takes the earth to orbit the sun.
- Tax year: The period used for computing federal or state income-tax liability, usually either the calendar year or a fiscal year of 12 months ending on the last day of a month other than December.
For example, a company may have a fiscal year that runs from July 1 to June 30. This means that all financial reporting and accounting activities for that company are based on this 12-month period. Similarly, the tax year used for calculating income tax may be different from the calendar year.
Understanding the fiscal period is important for accurate financial reporting and tax compliance.