 The accounting period concept, which is sometimes called the time period concept, means that businesses prepare financial statements for investors and creditors at the end of an accounting period. The basic accounting period is one year. An accounting period can be either a calendar year or a fiscal year. The end of the calendar year is probably pretty obvious because it always ends on December 31st. A fiscal year might be less obvious. A fiscal year is any consecutive 12 month period ending in a month other than December. For example, retail stores often choose a fiscal year of February 1 to January 31st. Companies also prepare interim reports for investors and creditors. These interim reports are usually monthly or quarterly. Revenue recognition principle tells us that we must recognize revenue in the accounting period in which it is earned. Recognized means journalized, or that we credit a revenue account in a journal entry. For service firms, earned means that we performed the service. For retailers, earned means that goods were delivered. Note that cash being received is not a requirement to record revenue. This is because we are learning, wait for it, a cruel accounting. Finally, the last one is an important principle similar to revenue recognition. The matching principle, which is now more commonly known as the expense recognition principle, requires all expenses incurred during the period to be identified. We can't omit expenses just because we don't want to record them. Once we have identified them, we need to measure the amounts. Sometimes we know the amount of the expense, other times we have to estimate it. I used to have to measure the amount of utility expense five dairy production plants incurred each month. Because of the accounting period concept, I couldn't wait until I received the utility bills in order to record the expense. Investors and creditors were waiting for the financial statements, so I had to estimate it each month. This was no easy task considering it was often around $5 million. Finally, we matched those expenses incurred during the month in which revenues are earned.