It’s the end of the month, now what?

Welcome to the “Month-End Close”

–  set of steps that “closes” your books at the end of the month to set your     
   numbers in stone.
–  issues arise when someone finds invoices or bills that weren’t recorded within
   the correct month.  These changes will cause the financials to be out of sync
   and it will result in incorrect financial statements
–  The exact steps in the month-end process may vary from company to
    company, however the process generally follows a 4-step process:

1. Record

  • ensure all revenue (incl. WIP) and expense transactions have been recorded in the Accounting Program (QuickBooks).   
  • record accrued liabilities, including payroll, employee vacation, interest expenses & taxes
  • review fixed assets and perform inventory count
  • post journal entries, depreciation & amortization

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2. Close

  • reconcile cash, chequing and savings accounts & credit cards
  • reconcile prepaid accounts
  • reconcile intercompany accounts

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3. Analyze

  • generate an adjusted trial balance and draft income statement, balance sheet and A/R & A/P aging reports
  • review & analyze, making accruals where necessary

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4. Report

  • prepare final Profit & Loss statements
  • utilize the reports for job costing, pricing corrections, management changes
  • compare reports with budgets and make the necessary appropriate changes 

Financial Reports vs. Management Reports: What's the Difference?

As a business owner, it can be overwhelming to “manage” or “do” the month-end close.  Many businesses skip this accounting procedure as it takes time or you may not know what needs to be done, or the supporting documents are not organized properly.  All of these challenges can be overcome!

If you want to include this for your business, contact us at Southbrook Accounting – nathan@southbrookaccounting.ca.  We have created checklists and helped many businesses get your numbers clean and up-to-date!