Year End in Accounting

What is a Year End?

The term year end refers to the date on which the annual accounting period ends. For example, if the accounting period for the business is the year to 31 January 2017, then the year-end date is 31 January 2017.

Financial statements are referenced to the year-end date. If the year end is 31 January 2017 then the balance sheet, which is drawn up at a point in time, will be headed ‘Balance Sheet at 31 January 2017’, and the income statement, which is for an accounting period will be headed ‘Income Statement for the year ended 31 January 2017’.

The year-end date does not have to coincide with the calendar year (31 December 2016). An accounting year-end which is not the calendar year end, is sometimes referred to as a fiscal year end.

At the year-end the business must complete the accounting cycle by posting the closing journal entries and preparing the records for the start of the next accounting period. In order to avoid having the year-end coincide with a busy trading period, the date chosen as the year end by the business will depend on its industry and tax environment, for example a retailer will normally be busy during the Christmas period and may therefore chose an alternative date such as 31 January as its year-end date.

For further information see the Wikipedia Accounting Year-End definition.

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Last modified September 25th, 2017 by Team

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