An accounting period is the span of time covered by a set of financial statements, typically a month, quarter or year.
The accounting period defines the timeframe for financial reporting. Monthly periods are used for management reporting, quarterly for tax obligations like BAS and VAT, and annual for year-end financial statements and tax returns. Choosing consistent accounting periods allows meaningful comparison over time. Within each period, all transactions must be recorded and allocated correctly. Period-end processes include cut-off procedures (ensuring transactions are recorded in the correct period), accruals and prepayment adjustments. SortBooks helps keep each period accurate by fixing miscoded transactions in Xero as you go, so period-end becomes a review rather than a catch-up.
SortBooks helps with the bookkeeping behind accounting period by connecting to your Xero account and using AI to suggest the right account for transactions sitting in catch-all accounts, learning from your own past coding. Instead of fixing accounting period by hand, you review each suggestion, approve it, and SortBooks updates Xero, GST code included. Then ask the AI CFO about your numbers, using live Xero data.
The financial year (or fiscal year) is the 12-month period your business uses for accounting and tax reporting purposes. It may or may not align with the calendar year.
The month-end close is the process of finalising all accounting activities for a month, including reconciliation, adjustments and report preparation.
Financial statements are formal reports that summarise your business's financial position and performance. The three core statements are the profit and loss, balance sheet and cash flow statement.
Accrual accounting records revenue when earned and expenses when incurred, regardless of when cash changes hands. It provides a more accurate picture of your financial position than cash accounting.
Closing the books is the process of finalising all accounting entries for a period and preparing the accounts for the next period. It includes reconciliation, adjustments and report generation.
Connect Xero, check the AI's suggestions and approve the changes. SortBooks updates Xero for you.