Surveys and research over the years show the month-end process generally takes between 5-10 days. Here is a list of common information accounting teams need to have on hand to close the monthly books:Įach company is different, so it’s impossible to say how long your month-end close should take. What Information Does Accounting Need for Month-End Close? Smaller companies may have fewer accounts while multi-nationals will have hundreds or thousands. Businesses that sell physical products will have the extra steps of tracking inventory while companies that are service-focused will not. The process may be different for various companies for many reasons. Review expenses and accounts payable records Record all incoming cash and accounts receivable What Are the Steps in the Closing Process?Īll companies are different but there are some common steps in closing the month-end books including: Once all accounts have been reconciled and statements are produced and reviewed by management, the accounting period is closed, and no further transactions can be recorded for the month. Finally, the team will prepare financial statements. Bank account statements will be reconciled. They will review revenue and expense accounts. The accounting team will reconcile cash accounts and balance sheets. This applies to such transactions as accrued expenses, amortization, depreciation, and loan interest. Journal entries of recurring monthly transactions must be performed at the time of the month-end close. One of the primary steps of the process is to reconcile subsidiary ledgers with the general ledger. With this information in place, the accounting team can perform the month-end close. Following a sound basis of accounting such as Generally Accepted Accounting Principles (GAAP) will maintain consistency across the organization and support the month-end close process. To perform a month-end close, the business’s accounting team will review, record, and reconcile all account information to confirm that the data is accurate.Ĭonsistent and regular (daily, if possible) journal entries of all transactions that will impact the financial records will help avoid delays and reduce errors when it is time to perform the month-end close.Īll departments whose activities impact financial records should follow similar procedures and maintain similar schedules to support the month-end close. The month-end close procedure involves several steps. Here is a month-end close process flowchart to visualize some of the key steps and processes. However, with proper preparation and systems in place, it is a source of reliable information and a sound business practice. Like all deadlines, the month-end close can be a source of tension for some organizations. It also helps the business prepare for tax filings. The process ensures that the data in those statements is reliable and accurate. Performing a month-end close helps build confidence in the company’s financial data which is used to prepare its financial statements. It supports sound decision-making, strategic planning, and financial investment. The process helps maintain consistency and accuracy within the organization. It helps catch errors before they become costly and helps evaluate the company’s financial well-being and its progress in meeting performance objectives. Reviewing and reconciling account information for the business on a monthly basis, or some other regular interval, supports business evaluation and forward thinking. The month-end close is an integral process that helps a business provide accurate financial data on a regular basis. It is intended to ensure that all transactions have been properly accounted for, which allows the business to close the books on this financial activity and start a new month with a fresh set of records. The process involves reviewing, documenting, and reconciling all financial transactions for that period. This timeframe represents a well-defined period for accounting purposes. The month-end close is an accounting procedure that finalizes and closes out all financial activity for a business for the preceding month.
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