BUSINESS ADMINISTRATION
FINANCIAL ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Natural business year
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Interim year end
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Quarterly year end
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None of the above
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Detailed explanation-1: -Seasonal businesses must select fiscal years that correspond to their natural business year because seasonal businesses operate on some particular season or a special occasion. Hence, they need to select a fiscal year that corresponds to its natural business year.
Detailed explanation-2: -Companies with little seasonal variation in sales often choose the calendar year as their fiscal year. Facebook, Inc., uses calendar-year reporting. Companies that have seasonal variations in sales often choose a natural business year end, which is when sales activities are at their lowest level for the year.
Detailed explanation-3: -Why do companies base their fiscal year on a natural business cycle? It’s at the low point in the operating cycle and provides time to analyze operations and prepare financial statements.
Detailed explanation-4: -Not necessarily. A fiscal year spans twelve months and corresponds with a company’s financial reporting periods. Sometimes, a fiscal year may differ from a calendar year.