Month end & Year end closing
Month-end and year-end closing in bookkeeping refer to the processes of finalizing financial records at the end of each month and year. These processes are crucial for ensuring that a business’s financial statements are accurate, complete, and up-to-date, providing an accurate snapshot of the company’s financial health.
Month-End Closing involves reviewing all transactions for the month, reconciling accounts, and making necessary adjustments. The bookkeeper ensures that all invoices, receipts, and payments are recorded, and that accounts receivable and payable are up-to-date. Any discrepancies are investigated and corrected. The bookkeeper also reviews the company’s profit and loss statement, balance sheet, and cash flow to confirm that they align with the records. Adjusting entries may be made for accrued expenses or revenue recognition, ensuring that the financial statements reflect the business’s true financial position.
Year-End Closing is a more extensive process that includes everything in the month-end closing, with additional steps such as preparing for tax filings, reviewing depreciation, and finalizing long-term liabilities. The bookkeeper ensures that all financial data is accurate for year-end reporting and tax preparation. They also prepare year-end reports, reconcile accounts, and ensure that all books are closed before transitioning into the new fiscal year.
By properly handling month-end and year-end closings, the bookkeeper ensures that the business’s financial records are accurate, minimizing the risk of errors and making tax preparation smoother.
