Question : What is the difference between a fiscal year and a calendar year?
Option 1: A fiscal year is 52 weeks long, while a calendar year is 365 days long
Option 2: A fiscal year starts on January 1st, while a calendar year can start on any day of the year
Option 3: A fiscal year is based on a government's financial cycle, while a calendar year is based on the Gregorian calendar
Option 4: A fiscal year is used for personal tax filings, while a calendar year is used for business tax filings
Correct Answer: A fiscal year is based on a government's financial cycle, while a calendar year is based on the Gregorian calendar
Solution : The correct answer is (c). A fiscal year is based on a government's financial cycle, while a calendar year is based on the Gregorian calendar.
A fiscal year is a period of 12 consecutive months that a government or organization uses for financial reporting and budgeting purposes. It is not necessarily tied to the Gregorian calendar. The start and end dates of a fiscal year can vary depending on the government or organization. For example, in the United States, the federal government's fiscal year starts on October 1st and ends on September 30th. Fiscal years are often aligned with the natural business cycle or specific budgetary requirements of a government or organization.
A calendar year, on the other hand, is the period of time based on the Gregorian calendar, which is commonly used worldwide. It begins on January 1st and ends on December 31st, comprising 365 days (or 366 days in a leap year). The calendar year is primarily used for civil and social purposes, such as personal record-keeping, tax filings, holidays, and annual events.
It's important to note that while many businesses and individuals use the calendar year for tax filings, some businesses and individuals may have fiscal years that differ from the calendar year. This allows them to align their financial reporting and budgeting with their specific operational or organizational needs.
