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The Julian calendar we use to pass the time each day, each week, each month and each year is the one most ordinarily used by businesses. Its general availability and familiarity make it a natural selection. However, the Julian calendar was surely not devised with the queer needs of the apparel and sporting goods retailer in mind. The seasonal, holiday and special event nature of retailing makes the Julian calendar practically useless for accounting periods. An accounting calendar that ingeniously relates to the business cycles of retailing is invaluable. Our business cycles are those periods of time among the get started and end of a sales season. In general, our business cycles end in July and January. An accounting amount of time is not one thing more than an artificial division of a business year, designed to give management data when it comes to a unit of time which is manageable. The amount of time must be long sufficient so that an infrequent or strange event will not distort the results. Yet it must not be so short that so much selective information is formulated that it may not be the right way absorbed and analyzed easily. If you can’t get data you need to make an analyzation of your business for the duration of the Spring season until August, what good is it? On the other hand, it doesn’t make sense to fabricate a every day report that takes all day to make an analyzation of and act upon. Therefore, the ordinarily accorded upon accounting amount of time is a month. If each accounting amount of time for one business year may be made to correspond to the same amount of time next year, and the next, this provides an worthful forecast tool for management. For instance, the month of December will have to have the same number of retail days each year, and it must have the same number of Mondays, Saturdays and Wednesdays. By shifting a few days here and there from one month to another, the result is a neat dovetailing of accounting months that stay the same from year to year. Now you have an accounting calendar that allows you to compare apples to apples, rather of oranges to apples; the 4-5-4 Accounting Calendar. The 1989 4-5-4 Accounting Calendar is shown. The 4-5-4 Accounting Calendar is just what it says. Each quarter holds a 4-week month, a 5-week month and a 4-week month. Each month begins on a Sunday and ends on a Saturday. Each month has the same number of merchandising days this year as it did last year and as it will next year. For example, March has 5 perfective weeks each year, 5 Saturdays, 5 Mondays, etc. For holidays that are a set day of the week, such as Thanksgiving, there will always be the identical syndication days before and after the holiday, year after year. This makes it much requiring little effort for the retailer to compare this year’s sales to last year’s sales. The 4-5-4 Calendar is peculiarly suitable for use in preparing sales forecasts and operating budgets. Also, since each month ends on a Saturday you will get enjoyment from the comfortableness of taking physical inventory counts at week end and not having to either subtract or add sales which preceded or followed the physical count to arrive at a clean cut-off. The inventory counts ought to accordingly be more accurate. The 4-5-4 Accounting Calendar begins with the month of February, which is traditionally the beginning of the Spring merchandising season and which is the most mutual beginning of year for retailers. Changing from the conventional Julian calendar to the 4-5-4 Accounting Calendar will make very few divergences in the store’s procedures. About the only divergence is to realize that for the original year, sales comparings may be made only at the end of each 13-week quarter. The 4-5-4 Accounting Calendar is also recognized by the IRS for income tax reporting purposes. It is referred to by the IRS as the 52-53 Week Year. To adopt the 52-53 Week Year it is necessary to file a statement with the tax return for the introductory tax year for which the election is made. Your local accountant may take care of this for you. In spite of the vantages of using the 4-5-4 Accounting Calendar, I regularly find merchants who sells goods at retail who do not use it; either because they are not intimate with it or think it will be too difficult to modify to a new calendar. I strongly advocate it’s use by all retailers. Not only does the 4-5-4 calendar make it more comfortable for the retailer to compare his performance to last year but it also makes it more comfortable to make future plans based upon past history. |
