Final answer:
A firm's fiscal year is a 12-month period used for financial reporting and can be any 12-month cycle that suits the company's needs. It is often the same as the calendar year and can end on any day of the month. It's typically 52 or 53 weeks long in companies that base their fiscal years on weeks.
Step-by-step explanation:
In the context of a firm's fiscal year, it is important to consider the various characteristics that can define this period. A fiscal year is a 12-month period that companies use for accounting purposes and preparing financial statements. While it is often aligned with the calendar year, it does not have to be. Let's address the statements provided:
- a. Firms do not necessarily need to end their fiscal year at the end of a calendar month, but they often do for simplicity.
- b. Yes, a firm's fiscal year is often the same as a calendar year, which runs from January 1st to December 31st, but companies can choose to operate on a different 12-month cycle based on business needs or industry practices.
- c. This is correct; a firm's fiscal year can indeed be any 12-month period that the company selects.
- d. Yes, the fiscal year is the annual period used for reporting purposes, such as filing taxes and creating financial statements.
- e. The fiscal year can occasionally be a 52 or 53-week period, especially for companies that operate on a weekly reporting cycle. Some companies follow a 52/53-week fiscal year, where certain years have 53 weeks to account for the yearly overage of days beyond the typical 52-week cycle.
Therefore, the correct selections that apply to the characteristics of a firm's fiscal year are b, c, d, and ambiguously e, with some context provided.