Trade Date Accounting

Over Thanksgiving, you negotiate a deal with your sister-in-law to buy the hand-crafted harmonium she has in her living room. You strike an agreement over pumpkin pie, but you can’t transport the harmonium until your next family get-together on New Year’s Day. You agree that you'll give her the money then, and take the instrument home with you after the party.
For this deal, Thanksgiving counts as the trade date: the day on which the deal was struck. However, New Year's day represents the settlement date, the day on which everything actually changes hands.

If you use trade date accounting, you would record Thanksgiving as the day the transaction took place. The other option is settlement date accounting, which sets the day of the deal as the day its settled.

Sometimes, the two don't make much financial difference. In this case, though, the trade date took place in one year, and the settlement took place in another. It might matter as pertains to taxes, and whatever other financial statements you prepare (you always like to include a nice spreadsheet in the Christmas letter you send out).