ACCA Advanced Taxation (ATX) Practice Exam

What does the term 'accounting reference date' (ARD) refer to?

1. Legal filing date for financial statements

2. A company’s 'year end' or 'financial year end'

3. Tax year for corporate taxes

4. The date of incorporation of a company

The correct answer is: A company’s 'year end' or 'financial year end'

The term 'accounting reference date' (ARD) primarily refers to a company’s 'year end' or 'financial year end.' This is the date to which a company prepares its annual accounts, and it is significant because it marks the close of the accounting period for reporting purposes. Companies are required to prepare financial statements for their shareholders and report their financial performance up to this date. Understanding the accounting reference date is crucial for financial reporting, as it establishes the timeframe of a company's transactions and events that need to be included in the financial statements. It also plays a role in determining deadlines for filing annual returns and accounts with regulatory bodies. Other options do not accurately reflect the definition of ARD. The legal filing date for financial statements, while related, is not the same as the ARD itself. The tax year for corporate taxes is a separate consideration that may not align with the ARD. Lastly, the date of incorporation is the date when a company was formed, which is distinct from the accounting reference date used for financial reporting.