The definition of an accounting year is the period of time in which the economic and financial situation of an organization is measured. It also means the period of time between two successive annual balances. In a certain way it can be considered as the accounting period in which the Laboral life Company.
What does an accounting exercise consist of?
In general, these results for the year are divided into one-year cycles that usually coincide with the calendar year, although this is not mandatory and is ultimately decided by the company itself. And there are other entities that choose to use the school year as a reference for their full accounting exercise, which will start after the summer.
The end date of the year corresponds mainly to the lowest point of activity of the company in the whole year. Fiscally it will always correspond to one year, except in the case of the period of constitution and dissolution of the business.
Any activity carried out within the full accounting year must be recorded in the company's accounting books, such as Diary book and Accounting Officer, who facilitate the completion of the balance sheets at the conclusion of this. Once the balance sheets are finalized, the accounts of the previous year are closed to inaugurate a new exercise.
In accounting years, a series of similar operations are carried out on most occasions, which are grouped into different stages. In an accounting cycle, there are three different phases:
- Opening: is the stage at the beginning of the activity, where the company opens its accounting year and begins to carry out economic operations that will be included in the accounting books.
- Movements: records the different transactions that are carried out.
- Closing: at the conclusion of an accounting period, the accounts are closed to know the economic result of that year. This is where the closing seat of that exercise.