What is the definition of a fiscal year?

A fiscal year is defined as a one-year period that organizations use for accounting purposes and to prepare their financial statements. This period can align with the calendar year, starting on January 1 and ending on December 31, or it can be different, depending on the organization's operational needs and business cycles.

A fiscal year allows companies to close their books and report their financial performance over a consistent time frame, facilitating comparisons to prior periods and helping stakeholders assess the company's financial health. Understanding the concept of a fiscal year is important as it directly impacts financial reporting, budgeting, and tax obligations for businesses.

The other choices do not accurately represent the definition of a fiscal year. A one-month period would refer to a different timeframe entirely, while a continuous accounting cycle without a fixed end does not standardize reporting periods at all. Lastly, designating a specific quarter does not encompass a full fiscal year, which must cover a complete 12-month period.