Accounting period
In one sentenceThe length of time over which the business's performance is measured and financial statements are prepared, such as a month, a quarter or a year.
Simply put
A business's life is continuous, but you need to cut it into periods to know: how much did you earn this month? And this year?
Dividing that life into periods is the reason adjusting entries exist, because some transactions start in one period and end in another.
Example
A restaurant manager may prepare a monthly report to track food cost, while the statutory financial statements are prepared for the full fiscal year.
Don't confuse it with
Fiscal yearIt is the main accounting period for which the statutory statements and the Zakat return are prepared.