Financial year
The financial year is the period for which the balance sheet and income statement are prepared; it normally runs twelve months, need not match the calendar year, and can be shorter or longer in the year of formation or of a change.
Definition
A shifted financial year makes sense in seasonal businesses — the balance sheet then falls in a quiet period with low stock. The price is the explaining owed to banks and authorities, which think in calendar years.
A change produces a short financial year. For tax it is a period of its own; comparisons with the prior year then only make sense after conversion.
Where to read it
What the software must be able to do
Check whether a financial year differing from the calendar year can be configured at all and whether short years are possible. Programs with the calendar year hard-wired are out for seasonal businesses.
Checked Aug 2026
More terms under Bookkeeping and retention: Accrual principle Accrued liabilities Annual accounts Association accounting Balance sheet Balance sheet total Book value Break-even point Business assets Business expenses Cash book Cash flow statement Cash receipts Contribution margin Cost centre Current assets Debit and credit Depreciation Double-entry bookkeeping Duty to keep accounts EBIT EBITDA Equity Equity ratio Fixed assets Fixed costs Foreign currency General ledger Gross profit Hidden reserves Income statement Inventory count Journal Journal entry Liabilities Liquidity Loss carry-forward Membership dues Net profit Opening balance sheet Overheads Pass-through item Prepaid expenses Provision Record-keeping ordinance Reserves Retained profit Simple accounts Swiss SME chart of accounts Tamper resistance Turnover Value adjustment Variable costs Volunteer-run structure Voucher Year-end closing modules