Accounting Month End Close Check List / Procedure

Accounting Month End Close Check List / Procedure

Accounting Month End close checklist is important to ensure that financial records are upto date as on month end. An Accountant need to follow accounting month end close check list to status of each transaction. Month end closing dates from company to company differ. Monthly 31St /30th is month end dates followed in most of companies. Also from taxation , payroll point of view these month end closing dates may changes. Accurate and timely month end accounting record provide key information data to forecast sales , budgeting , next month forecasting etc. By following month end accounting closing you ensure there are no suspense entries books and accounts ready for audit and tax filing. Accounting statement need to follow as Generally Accepted Accounting Principles (GAAP) and are produced within a reasonable period of time after the month has ended. Periodic month end , quarterly reports are very important to management. Its is very important that accountant need to perform month end closing as it enables generate accurate and consistent financial statements accountant.

Financial information is important for effective planning, decision making etc. you need to get into a regular cadence of closing your book. In this post, we give details about steps to follow month end accounting for Quickbooks, Xero, Zoho , Freshbooks , Wave etc.

 


1. Bank & Credit Card reconciliation

Month end bank and credit card reconciliation are needed to be completed. This is first basic step to follow. By following linking bank, credit card account in cloud accounting software you need to ensure that correct entries are posted and month end balance in bank and in cloud accounting software matches. Month end suspense entries or pending entries need to be accounted with help of manager. All credit card , bank charge , bills paid , bills received need to be accounted in timely manner. Following month end bank & Credit reconciliation ensure you posting each transaction correct. By doing monthly reconciliation you know what is accounts receivable , accountants payable , bank changes , current asset , current liabilities. After introduction of mobile wallets months all transaction are started routing though bank hence it become important for reconciliation.


2. Record Monthly Journal Entries

A journal is a record of transactions listed as they occur that shows the specific accounts affected by the transaction. In Accounting Month End Close Check List recording of Journal entries are important. Journal entries are important part of accrual basis bookkeeping concept. Month end journal entries such as Bills payable , Monthly recurring bills etc. Entries such as amortization , depreciation. In most cases, accounting systems are able to automate recurring journal entries


3.Review Inventory

Review inventory on monthly intervals is important. Review of inventory helps to
Identity cost of goods sold , negative inventory, non moving inventory item. Inventory audit can be done as FIFO or LIFO method basis. This ensure inventory in shop and inventory in bookkeeping software tally. Associated cost of inventory also need to be accounted in books.


4.Variance Analysis

Management or business owner want to see variance analysis from business point. Month end variance analysis means comparing month end accounting numbers with last month as well as budget prepared. Month end Accounting variance analysis help in understanding positing of company. This can help to identify mistakes and help to adjust prepaid and accrual expenses.


5.Reconcile aged debtors and creditors

Preparing month end aged debtors & creditors report is important part of Accounting Month End Close Check List. Monthly reconciliation of debtors and creditors ensure that vendors & customers number tally with your ledger balances.
Aged Debtors report end helps sales team to followup with customers for recovery and aged creditors report helps that you pay vendors on time which helps to avoid late payment interest. Prescribed excel format shall be used to maintained & report month end debtors and creditors balances.


6.Review revenue and expense accounts

Once month end accounting is completed check for each head of expenses & revenue and check accounting transaction are posted correctly. By checking banking narration and memo ensure that accurate ledger from charts of accounts is selected , date etc.


7.Prepare financial statements

Once accounts team complete above month end accounting tasks and ensure that bank reconciliation , accounts payable , receivable etc. ledger are correct. Cloud bookkeeping software helps to prepare monthly financial statements. From report section monthly financial statements can be prepared. Business owner want to know monthly accounting reports to plan taxes , loans , government subsidy etc.


8.Financial Review

Detailed review the financial statements and completion of monthly closing checklist is done by senior accountants. In some processes, we also deploy a quality control accountant, who reviews the financials prepared by other accountants. Post preparation of financial statements, accountants would typically respond in a structured and data oriented manner to multiple queries raised by senior management. If necessary, financial analysis of the statements is also done and information dashboards are prepared.

Detail review of moth end accounting closure is done by senior accountants. In MNC companies they hire quality control accountant who reviews the financials prepared by other accountants. After management review accountant started preparing data in more structured manner. If necessary, financial analysis of the statements is also done and information dashboards are prepared


How Long Does a Accounting Month End Closes ?

  • Accountant have lost of pressure to get month end books closing. Business owners and executives use last month’s financials as a starting point to make business decisions for the upcoming month. Sooner the business owner get numbers by this they identify what went well and what went wrong. Technology play important role to meet month end closing deadline. Survey records as below
    • 58% companies takes +7 Days
    • 29% companies takes 4 Days
    Closing Accounting Month on faster rate means changes that your compromising on accuracy over number. Its import that accountant to follow month closing accounting checklist. This will help to close books accurately and timely

Summary

  • The month-end Accounting close checklist can help you to avoid mistakes , timely reconciliation. Each month is important from accounting point hence post all transaction correctly helps to keep books and business up to date. Follow Accounting Month end checklist to keep all data uptodate.

 



Leave a comment

Your email address will not be published. Required fields are marked *