Final answer:
Academic terms that span two fiscal periods are accounted for by distributing revenues and expenses based on when services are performed or costs are incurred across both periods, ensuring accurate financial statements.
Step-by-step explanation:
Academic terms that span two fiscal periods are accounted for in a way that requires an understanding of revenue recognition and expense matching principles. In accounting, these terms are allocated to the appropriate fiscal periods based on when the services are performed or when the costs are incurred, rather than when the money is exchanged. For instance, if an academic term begins in one fiscal year and ends in the next, the associated revenue (such as tuition fees) and expenses (such as instructor salaries) would be prorated across the two fiscal periods based on the amount of service provided or costs incurred in each period.
This practice is important for producing accurate financial statements. It ensures that the fiscal periods reflect the true financial activity related to the academic term, even if this spans across different fiscal years. The concept is similar to understanding how a budget deficit or surplus is calculated, which is the difference between the tax revenue collected and spending over a fiscal year.