What are the benefits of a fiscal year not aligning with a calender year, specifically with a government?


From research as someone who doesn’t understand economics in the slightest, I kind of get some of how it has to do with how a business operates, like I understand why schools make more sense not following the calender year. But why would this benefit the US government? Did something in particular make this a common practice?

In: Economics

The holidays and new years celebrations often have high sales volumes for many industries, so settling the books may be easier when away from these peak times.

Some business cycles are different from a calendar year.

Classic example is a farmer. Their business cycle is the harvest in September, sell everything in October and November-December is waiting around. January is planning for the next planting, buying seeds, fertilizer, repairing equipment, etc.

Maybe it might make sense to close their books in October after the harvest is sold, and November – May is accounted against the next harvest. Not the one that just ended.

Applying the cost of the seed you buy to plant in 2019 against the money you made from the harvest in 2018 doesn’t make sense. It makes more sense that 2019 seed costs are applied against 2019 sales.