4-4-5 Accounting Calendar

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Accounting and Reporting Periods
RevRec 4-4-5 Accounting

Overview

An accounting period is a span of time during which businesses gather, prepare, and organize their financial activity. The accounting cycle begins at the start of the accounting period and ends on the final day of the period. Once the accounting period closes, the company can prepare its financial statements based on the work done during the accounting cycle.

4-4-5 Accounting Calendar is one of the methods of managing accounting periods. The 4-4-5 accounting calendar means that in each quarter, the first accounting period consists of the first four weeks, the second period consists of the next four weeks, and the third period consists of the next five weeks. This quarter accounts for 13 weeks, and the four quarters account for 52 weeks in total or the full calendar year.

A twist to this uniform schedule occurs once in every six years when a fifty-third week comes up to catch up for leap years and the standard 52-week year accounts for only 364 days.

How RevRec Handles 445 Accounting?

When 4-4-5 accounting functionality is enabled, RevRec closes the accounting period with a defined fiscal period-end instead of the gregorian calendar month-end. Revenue Recognition is done according to the number of days in a fiscal period which means that it works only with the Daily Ratable Plan where RevRec calculates the per day revenue of a contract and applies it to the number of days in each fiscal period.

Configuring 4-5-5 Accounting in RevRec

Contact RevRec Support to enable this feature on your RevRec site with the following information to set the fiscal year start date and the accounting calendar method:

Setting	Configuration Options
Week Grouping	4-4-5, 4-5-4, 5-4-4
Last Day of Week	Sunday, Monday, Tuesday, Wednesday, Thursday, Friday, Saturday
Last Month of Year	Any month between January and December
Leap Year Strategy	The extra week to be added to: the eleventh month of the sixth year, or the twelfth month of the sixth year

Example

If the last day of the week is set to Saturday and the last month of the year is configured as January, then

29th January will be the end of the previous fiscal year as per the calendar date.
30th January will be the start date of the current fiscal year.

Examples

A one-year ratable contract is created with a contract value of $1,200 on 15th January 2022. The fiscal year start date is set as 30th January.

As per the fiscal calendar, the contract date - 15th January 2022 falls in the last period of the previous fiscal year since the current fiscal year starts on 30th January. With the group 4-4-5, the last period of the previous fiscal year consists of 35 days. Therefore, revenue is recognized for 15 days in that period. Furthermore, the system follows a 28-28-35 days routine in the current fiscal year and recognizes revenue accordingly.

Acct Period	Acct Period Start Date	Acct Period End Date	Days in Acct Pd	Rev Start/End date	Days of RevRec	Rev Recognized
2021-12	12/26/2021	01/29/2022	35	01/15/2022	15	49.32
2022-01	01/30/2022	02/26/2022	28		28	92.052
2022-02	02/27/2022	03/26/2022	28		28	92.052
2022-03	03/27/2022	04/30/2022	35		35	115.07

4-5-5 Accounting Calendar

A one-year ratable contract is created with a contract value of $1,200 on 15th January 2022. The fiscal year start date is set as 30th January.

As per the fiscal calendar, the contract date - 15th January 2022 falls in the last period of the previous fiscal year since the current fiscal year starts on 30th January 2022. With the group 4-5-4, the last period of the previous fiscal year consists of 28 days. Therefore, revenue is recognized for 15 days in that period. Furthermore, the system follows a 28-35-28 days routine in the current fiscal year and recognizes revenue accordingly.

Acct Period	Acct Period Start Date	Acct Period End Date	Days in Acct Pd	Rev Start/End date	Days of RevRec	Rev Recognized
2021-12	01/02/2022	01/29/2022	28	01/15/2022	15	49.31
2022-01	01/30/2022	02/26/2022	28		28	92.05
2022-02	02/27/2022	04/02/2022	35		35	115.06
2022-03	04/03/2022	04/30/2022	28		28	92.05

5-4-4 Accounting Calendar/Group

A one-year ratable contract is created with a contract value of $1,200 on 15th January 2022. The fiscal year start date is set as 30th January.

As per the fiscal calendar, the contract date - 15th January 2022 falls in the last period of the previous fiscal year since the current fiscal year starts on 30th January 2022. With the group 5-4-4, the last period of the previous fiscal year consists of 28 days. Therefore, revenue is recognized for 15 days in that period. Furthermore, the system follows a 35-28-28 days routine in the current fiscal year and recognizes revenue accordingly.

Acct Period	Acct Period Start Date	Acct Period End Date	Days in Acct Pd	Rev Start/End date	Days of RevRec	Rev Recognized
2021-12	01/02/2022	01/29/2022	28	01/15/2022	15	49.31
2022-01	01/30/2022	03/05/2022	35		35	115.07
2022-02	03/06/2022	04/02/2022	28		28	92.05
2022-03	04/03/2022	04/30/2022	28		28	92.05

4-4-5 Accounting Calendar - Chargebee RevRec (2024)

FAQs

What is a 4-4-5 accounting calendar? ›

4–4–5 accounting is a method of managing accounting periods. Accounting cycles, or calendars, define the number of weeks in each financial period in each financial quarter. The 4-4-5 accounting calendar divides a year into four quarters of 13 weeks, each grouped into two 4-week "months" and one 5-week "month".

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What is the 4-4-5 retail calendar? ›

The 4-5-4 calendar is a guide for retailers that ensures sales comparability between years by dividing the year into months based on a 4 weeks – 5 weeks – 4 weeks format. The layout of the calendar lines up holidays and ensures the same number of Saturdays and Sundays in comparable months.

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What is 4-4-5 accounting basis? ›

4-4-5 Accounting Calendar is one of the methods of managing accounting periods. The 4-4-5 accounting calendar means that in each quarter, the first accounting period consists of the first four weeks, the second period consists of the next four weeks, and the third period consists of the next five weeks.

What is the 4-4-5 calendar for 2024? ›

The 4-5-4 retail calendar for 2024 starts on Sunday, 4th of February 2024 and ends on Saturday, 1st of February 2025. Since retail calendar days need to be multiple of 7, the calendar year is 364 days and not 365, and so every 5 to 6 years one extra week is added to the calendar and makes it 53 weeks.

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How do you read a 4-5-4 calendar? ›

Created and used by the National Retail Federation (NRF), the 4-5-4 calendar divides the year into four quarters, each made up of 3 months. Each month alternates having four, five, and four weeks consecutively.

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What is the 4-5-4 calendar and why how is it used? ›

The 4-5-4 retail calendar is a scheduling framework that divides the year into months of four weeks, five weeks, and four weeks in a repeated pattern, ensuring each fiscal month starts and ends on the same weekday. This design aligns sales data across similar periods.

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What are steps 4 and 5 in the accounting cycle? ›

To quickly summarize, the five steps in the accounting cycle include: collecting and analyzing transactions, journalizing the entries, posting the entries into the ledger, checking for errors and trial balance, and lastly, the reporting period.

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What is the 5% rule in accounting? ›

GAAP materiality is defined by a 5% rule. Auditors make decisions based upon a 5% rule. Misstatements of less than 5% have no effect on financial statement fairness. The 5% rule is widely used in practice.

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What are the 5 basis of accounting? ›

Although the guidelines for accountants are extensive, there are five main principles that underpin accounting practices and the preparation of financial statements. These are the accrual principle, the matching principle, the historic cost principle, the conservatism principle and the principle of substance over form.

What are the benefits of the 4-4-5 calendar? ›

The 4-4-5 accounting system is particularly popular in certain sectors, including retail, manufacturing, consumer goods distribution, hospitality and publishing. It has the advantage that each period is the same length and ends on the same day of the week.

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Why does the 4-5-4 calendar start in February? ›

The 4-5-4 calendar starts in February for two major reasons: It allows the major end-of-the-year holidays and holiday returns to stay in the same fiscal year. It also lets retailers start their new fiscal years fresh, with no lingering holiday items to attend to.

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What is the 454 calendar format? ›

It is now widely known as the “4-5-4 Calendar”. Named for its standard quarterly format–a four-week month, followed by a five-week month, followed by another four-week month. This format is standard for each quarter in every year, with a single notable exception…

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What is the 4 accounting cycle? ›

The first four steps in the accounting cycle are (1) identify and analyze transactions, (2) record transactions to a journal, (3) post journal information to a ledger, and (4) prepare an unadjusted trial balance. We begin by introducing the steps and their related documentation.

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What are the two types of calendar in accounting? ›

The accounting period has no fixed length, and it can be of any length, such as one year or less and maybe more than one year. It has two types, namely calendar year and fiscal year. Accordingly, it can start from the first date of any month.

What is 4-4-5 calendar in Oracle Fusion? ›

For example, to define a 4-4-5 calendar, set up your fiscal years, depreciation calendar, and prorate calendar with different start and end dates, and fill in the uneven periods. You can divide annual depreciation proportionately according to the number of days in each period or evenly in each period.