An accounting period is the span a set of statements covers: a month, a quarter, or a year.
Closing a period
Closing means the figures for that span are complete and will not change. Until then a profit and loss is provisional, because transactions are still arriving.
A typical close involves reconciling every bank and card account against its statement, entering bills received for work done in the period, checking that costs sit in the period they relate to, and reviewing anything uncategorised.
Without it, comparing one month to another compares a settled figure against an unfinished one, and the difference is noise rather than information.
Why costs land in the wrong period
A supplier invoice arriving in April for materials used in March belongs to March. Recorded when it arrives, March looks better than it was and April looks worse.
This is what accrual accounting exists to correct, and the adjustments are prepaid and accrued expenses.
The financial year
Twelve months, not necessarily January to December. A business may align it with its trade — after the peak season rather than through it — though the choice is constrained by tax rules and is not freely changed once set.
Year end
The same work as a month end with additions that only occur annually: depreciation for the year, inventory counted rather than estimated, owner compensation and distributions confirmed, and the figures agreed with whoever prepares the tax return.
Locking
Once a period is closed and a return filed on it, changing the figures behind it means the filing no longer matches the records. Closed periods are locked for that reason, and a correction is made in the current period rather than by reaching back.