Accounting periods fiscal year an accounting period

new accounting period, subject to the provisions of Section 47.
Accounting periods
Fiscal Year
An accounting period of 12 months ending on the day of any month other than
December.
Calendar Year
An accounting period of 12 months which starts on the first day of January and
ends on the last day of December.
Calendar year should be allowed if:
a. The taxpayer’s annual accounting period is other than a fiscal year.
b. The taxpayer has no annual accounting period, or does not keep books.
c. The taxpayer is an individual.
a. While a choice of accounting period is a management discretion, change
thereof must be approved by the Commissioner of Internal Revenue through
the Revenue District Office of registration;
b. The reason for change must be duly stated in the application;
c. Submission of the final adjustment return; and,
d. Duly approved amended By-laws for corporate taxpayers with the new
accounting period.
ITR, whether for an individual or for corporation, association or partnership, are
required to be filed on Dec. 31st of every year
FISCAL PERIOD - corporation, association, or partnership may with the approval of
the Commissioner of IR, file their returns and compute their income on the basis
of a fiscal year
- An accounting period of 12 months ending on the last day of the month other
than Dec.
DOES NOT APPLY TO
- individual taxpayer
SHORT PERIOD
an accounting period of a taxpayer for less than 12 months, as when the annual
accounting period of a subsidiary is changed to conform with the annual
accounting period adopted by its foreign parent company for easy consolidation
of their audited worldwide financial statements.
THIS IS AS AN EXE TO THE RULE
- That the accounting period or taxable year consist of 12 months.
3.5 Apply the accounting methods
METHOD OF ACCOUNTING
CASH METHOD ACCRUAL METHOD
All items of gross income received
during the year shall be accounted for
in such taxable year; and the only
expense actually paid shall be claimed
as deductions during the year
A method of accounting for income in
the period it is earned, regardless of
whether it has been received or not.
- same as for the expenses, it shall be
accounted for in the period they were

(regardless of the taxable year when
the services is performed or the
expenses incurred).
incurred, and not in the period they
are paid
admits both actual and constructive
receipt of cash or its equivalent
INSTALLMENT PAYMENT DEFERRED PAYMENT PERCENTAGE
COMPLETEION
Appropriate when:
- collections of the
proceeds of sale and
income extends over
relatively long periods of
time and there is strong
possibility that full
collection will not be
made
this includes:
1.agreement of purchase
and sale which
contemplate that a
conveyance is not to be
made at the outset, but
only after all or
substantial portion of the
selling price has been
paid
2. sales in which there is
a n Immediate transfer of
title, the vendor being
protected by mortgage
or other liens as to
deferred payments
is applicable in case of:
building, construction,
installation contracts
covering a period in
excess of 1 year -
whereby, gross income
derived from such