ACCOUNTING PERIOD CONCEPT

·      A fixed equal period of time ascertained to report the financial performance of an enterprise. If this fixed equal period of time is not ascertained, the business based on the going concern concept can last a quite a long period of time which will render the analysis of the financial statement impractical. Normally, these fixed equal period may be of any length of time but periods of one year in length are the most commonly used.

·      We can say that accounting period is a convenient way of dividing up the life of the business into smaller units of time to enable investors and other users of the financial statement to assess the financial performance.

·      The normal twelve months accounting period is also to coincide with the taxation period ( twelve months )

  Illustration:

      Company A has just been incorporated. It decides to put up its accounting period for twelve months ending every 31^st December.