reikningsári

Reikningsári is an Icelandic term that translates to "accounting year" or "fiscal year" in English. It refers to the period of twelve consecutive months that a business or organization uses for its financial reporting and accounting purposes. While often aligned with the calendar year (January 1st to December 31st), a reikningsári can also be set to a different twelve-month period, known as a fiscal year.

The choice of a reikningsári is important for several reasons. It provides a consistent timeframe for tracking income, expenses, profits, and losses. This consistency is crucial for comparing financial performance over time, making informed business decisions, and for tax purposes. Companies may choose a reikningsári that aligns with their seasonal business cycles to better reflect their operational peaks and troughs. For example, a retail business might choose a reikningsári that ends after their busiest holiday season.

In Iceland, like in many other countries, tax regulations often dictate certain requirements regarding the reikningsári for reporting to the tax authorities. While businesses have flexibility in choosing their accounting year, it must be consistently applied and reported to relevant government bodies. The reikningsári forms the basis for preparing annual financial statements, such as balance sheets and income statements, which are essential for stakeholders including investors, creditors, and management.