DECA Sports and Entertainment Marketing Practice Exam

Which term describes a 12-month accounting period?

1. Fiscal Year

2. Calendar Year

3. Tax Year

4. Business Cycle

The correct answer is: Fiscal Year

The term that describes a 12-month accounting period is "Fiscal Year." A fiscal year is a period that companies and governments use for financial reporting and budgeting, and it may not necessarily coincide with the calendar year, which runs from January to December. Organizations choose their fiscal year based on their business cycles or industry standards, allowing for more accurate financial analysis and planning. This distinction is crucial for businesses as it can influence financial reporting, tax obligations, and operational insights, reflecting the organization's specific economic cycles. In contrast, while a calendar year refers to the standard January 1 to December 31 period, the tax year may align with the fiscal year or calendar year, depending on the organization's choice. The business cycle describes the fluctuations in economic activities such as expansion and contraction, rather than serving as an accounting period. Hence, "Fiscal Year" is the most fitting term to describe a standardized 12-month accounting period.