> For the complete documentation index, see [llms.txt](https://docs.xorosoft.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.xorosoft.com/xoroerp-1/accounting/fiscal-year-end/what-is-fiscal-year-end.md). # What is Fiscal Year End? ### What is a Fiscal Year? Every business has a fiscal year. A fiscal year is 12-month period used by the companies for accounting purposes. It does not necessarily coincide with the calendar year (which runs from January 1 to December 31) but can be any 12-month period chosen by the organization. The fiscal year is important for accounting purposes because it is used to prepare annual financial statements and reports. ### **Why do we need a fiscal year?** * **Choice of Period**: Organizations can choose their fiscal year period based on their operational needs, industry practices, or tax considerations. For example, a company might choose a fiscal year that ends on June 30, September 30, or any other date. * **Financial Reporting:** Annual reports, budgets, and financial statements are prepared based on the fiscal year, which helps in comparing financial performance over time and making informed business decisions. * **Tax Reporting:** Fiscal years are crucial for tax reporting purposes. They allow governments to collect taxes in a structured way and for businesses to file their tax returns accurately. ### Fiscal Year End Fiscal Year End is the date that marks the conclusion of a company's fiscal year. This is the point at which the annual accounting period ends, and it is used for financial reporting and tax purposes. The fiscal year is expressed by stating the year-end date. A fiscal year-end can be the end of any quarter — March 31, June 30, September 30, or December 31. Closing entries are made at the end of the fiscal year end that concludes the period in preparation of the next fiscal year. ### Closing Entries Closing journal entries are made at the end of an accounting period to prepare income statement *accounts* for the next period. This is because income statement accounts are measured *periodically,* so the amounts in one accounting period should be closed or brought to zero so that they won’t get mixed with those of the next period. *Note: This process is called Fiscal Year End in Xoro* Income Statement accounts consist of all *revenue* and *expense* accounts. Take note that closing entries are prepared only for temporary/income statement accounts. Permanent accounts are *never* closed. --- # Agent Instructions This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com. ## Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter, and the optional `goal` query parameter: ``` GET https://docs.xorosoft.com/xoroerp-1/accounting/fiscal-year-end/what-is-fiscal-year-end.md?ask=&goal= ``` `ask` is the immediate question: it should be specific, self-contained, and written in natural language. `goal` is optional and describes the broader end goal you are ultimately trying to accomplish on behalf of the user. GitBook uses it to tailor the answer towards what is most useful for that goal. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.