Accounting period concept

Despite the fact the existence of the business is longer in span, which is classified into the operating periods which are smaller in duration. The accounting span may be either calendar year (January -December) or fiscal year(April-March). The operating periods are not concept of synthesis in between the expenses and revenues.

According to entity concept owner and business organizations are two separate entities. Accounting concept for long lastingness of the business correspondent among the trading firms, which means that the operating period of one firm Financial Accounting may be shorter than another one.

The eventual aim of the concept is to quash the deviations of the operating periods of various traders in the trading practice. According to the Companies Act, 1956, the accounting period should not exceed more than 15 months. In other words to bring out the uniformity in trade period and profit recognition. Which eventually helps firm to understand the current financial position and helps to take decisions.