What is the Fiscal Year-End?

Year-end refers to the conclusion of an organization's fiscal year. Many firms observe a calendar year end, in which case their year-end is December 31. Other organizations observe different fiscal years, which result in other year-end dates. For example, a business that observes a fiscal year beginning on February 1 would have a year-end of January 31. The year-end for a business is typically selected to be at the end of a month in which the organization has experienced declining activity. By doing so, it will have liquidated much of its receivables and inventory, making it easier to close the books. Once established, a business rarely changes its designated year-end date.

The year-end is a critical period for the accounting department, which has a tightly-scheduled procedure for closing the books, preparing account reconciliations, issuing full-year financial statements, and preparing for an examination by the outside auditors.

Fiscal Year-End vs. Calendar Year-End

A business that uses a fiscal year-end can set any date to be its end-of-year date, while a business that uses a calendar year-end must close its books as of December 31. It is possible for a business to have its fiscal and calendar year-ends coincide, which is the case when its year-end is on December 31.