Explained
Many businesses pick a year that ends in their quiet season rather than their busiest, because counting stock and closing the books is easier when little is moving. What matters is that it stays the same: changing it makes a comparison between two years a comparison between two different periods.
Related terms
- Period closeClosing a period stops new entries being dated into a month or year that has finished and been reviewed.
- Income statementAn income statement shows a business’s revenue and expenses over a period; the difference is the net profit or loss.
- Balance sheetA balance sheet shows a business’s assets, liabilities and equity at a date; assets always equal liabilities plus equity.