A fiscal year is a period of time that a firm or government uses for its accounting and preparation of financial statements. Though it is similar to a calendar year in that it is 12 months, the Internal Revenue Service (IRS) provides firms the choice to pay tax liabilities on a calendar year basis or fiscal year basis.
The Internal Revenue Service dictates that a fiscal year consists of twelve consecutive months ending on the last day of any month with the exception of December. Thus, a firm can report its financial statements to various regulators and shareholders as of the fiscal year ending February 28.
