The fiscal year and the calendar year are two distinct ways of measuring time, each with its own purpose and characteristics:
Fiscal Year
- Definition: The fiscal year (FY) is a financial accounting period used by businesses, governments, and organizations to track their financial activities.
- Duration: It typically spans 12 months, but the starting and ending dates can vary.
- Start and End Dates: The fiscal year does not necessarily align with the calendar year. It often begins on a date other than January 1st.
- Purpose: It is primarily used for financial reporting, budgeting, and tax purposes.
- Examples:
- In Nepal, the fiscal year starts around mid-July and ends around mid-July of the following year.
- In the United States, the federal government’s fiscal year runs from October 1st to September 30th.
Calendar Year
- Definition: The calendar year is the standard 12-month period that follows the natural progression of months.
- Duration: It spans from January 1st to December 31st.
- Start and End Dates: It aligns with the months of the year.
- Purpose: It serves as a common reference for daily life, historical events, and personal planning.
- Examples:
- New Year’s Eve celebrations occur on December 31st, marking the transition from one calendar year to the next.
- Income tax returns in many countries are based on the calendar year.
In summary, the fiscal year focuses on financial matters, while the calendar year is a broader measure of time used in everyday life. Both systems have their own significance and applications.
