ACCOUNTING PERIOD

Lesson 3
ACCOUNTING PERIOD
 Accounting period is the length of time over which
income is measured and reported.
Types of Accounting Period
 Regular Accounting
Period
 Short Accounting
Period
Regular accounting period- 12 month in length
Calendar Fiscal
Short accounting period- LESS THAN12
month in length
CALENDAR YEAR
 The calendar accounting
period starts from January 1
and ends December 31.
 This accounting period is
available to both corporate
taxpayers and individual
taxpayers.
Calendar year
 Under the NIRC, the
calendar year shall be used
when the:
1. Taxpayer’s annual
accounting period is other
than a fiscal year.
Calendar year
 Under the NIRC, the
calendar year shall be used
when the:
2. Taxpayer has no annual
accounting period.
Calendar year
 Under the NIRC, the
calendar year shall be used
when the:
3. Taxpayer does not keep
books
Calendar year
 Under the NIRC, the
calendar year shall be used
when the:

4. Taxpayer is an individual
FISCAL YEAR
 A fiscal accounting period is any
12-month period that ends on any
day other than December 31.

 The fiscal accounting period is

available only to corporate
income taxpayers.
Accounting Practices

 Tax Year : The fiscal year begins on 1 January and ends on 31

December of the same year.
 Accounting Reports : The general balance sheet and/or the
declaration written under oath of the non holding of an annual meeting,
and the financial statements.
 Publication Requirements: Companies must publish an annual
financial report and submit it to the Securities and Exchange Commission
(SEC).
Deadline of Filing the Income Tax Return
INSTANCES OF SHORT ACCOUNTING
PERIOD
INSTANCES OF SHORT ACCOUNTING PERIOD
1. Newly commenced business
2. Dissolution of business
3. Change of accounting period by corporate taxpayers
4. Death of the taxpayer
5. Termination of the accounting period of the taxpayer by the
Commissioner of Internal Revenue
Newly commenced business
 The accounting period covers the date o the start of
the business until the designated year-end of the
business.
Illustration: short accounting period
 Earth, Inc. Started business operation on
June 30 , 2019 and opted to use the
calendar year accounting period.

 Earth should file its first income tax return

covering June 30 to December 31, 2019
for the year 2019.

 The return must be filed on or before

April 15, 2020
Dissolution of business
 The accounting period
covers the start of the
current year to the date
of dissolution of the
business.
Illustration:
 Mars, Inc. Is on the fiscal year accounting period
ending every March 31. It ceased business
operation on August 15, 2019.

 Mars should file its last income tax return covering

April 1 to August 15, 2019.
Change of Accounting Period by corporate taxpayers
 The accounting period covers the start of the
previous accounting period up to the designated
year-end of the new accounting period.
 Note that BIR approval is required in changing an
accounting period. It is not AUTOMATIC.
Illustration 1:
 Effective February , 2019, Neptune, Inc. Change its
calendar accounting period to a fiscal year ending
every June 30.

 Neptune, Inc. Shall file an adjustment return

covering the income from January 1 to June 30, 2019
on or before October 15, 2019.
Illustration 2:
 Effective August 2019, Jupiter Inc. Changed its fiscal
year accounting period ending every June 30 to the
calendar year.

 Jupiter Inc. Should file an adjustment return

covering July 1 to December 31, 2019 on or before
April 15, 2020.
Death of the taxpayer
 The accounting period
covers the start of the
calendar year end until the
death of the taxpayer.
Illustration
 Mr. Jacob died on November 2, 2019.

 The heirs of Mr. Jacob or his estate administrators or executors shall file
his last income tax return covering his income from January 1 to
November 2, 2019.

 There is no requirement for early filing in case of death of taxpayers.

Hence, the income tax return shall be filed on or before the usual
deadline , April 15, 2020.
Termination of the accounting period of the taxpayer
by the Commissioner of the Internal Revenue

 The accounting period covers the start of the

current year until the date of the termination of the
accounting period.
 Illustration:
 The accounting period of a
taxpayer under the calendar year
basis was terminated by the CIR
on August 2, 2019

•The taxpayer must file an income

tax return covering January 1 to
August 2, 2019. The income tax
return and the tax shall be due and
payable immediately.
 Note: For Calendar Year the due date
for filing of income tax return is every APRIL 15
of the following year.

Note: For Fiscal Year the due date

for filing of income tax return is on the
4th month 2nd week after the fiscal year ended.
(no specific date)
depende sa Fiscal year ng company iyon.
 Note: Fiscal Year is only allowed
for the corporation.
The corporation has the option if they will adopt
the Fiscal Year or Calendar Year

Example:
March 1- Febuary 28
June 1- May 31
Note: For Individual Taxpayers
ONLY Calendar Year is allowed.

January 1-December 31
Change of Calendar to Fiscal Year
or Fiscal to Calendar Year
are subject for BIR approval.
 CALENDAR YEAR

Period starts every January 1 and ends on

December 31
Due date of Filing:
Every April 15 of the following year