1. Verify that all transactions are properly recorded in the general ledger.
All financial transactions should be properly reflected in the company’s general ledger. This means that all created invoices, payments, costs, and other expenses should be accurately recorded and tracked against its corresponding account in the general ledger. Additionally, any double-entry transactions, such as loans and investments, must also be properly recorded.
2. Reconcile bank and credit card accounts.
At the end of each month, all bank and credit card statements should be reconciled against the company’s books. It is important to ensure that cash balances remain consistent with records in the general ledger. This process helps confirm that all financial transactions are accurate and that there are no discrepancies or errors present in the data.
3. Close inventory records.
The closing of inventory records involves taking an inventory count at the end of each month to ensure accuracy in tracking current supplies, materials, finished goods, etc., on hand versus what is being used or sold. This helps provide a clear picture of the company’s inventory balance in order to accurately report on profits, losses and other financial measurements.
4. Perform accruals and adjusting journal entries.
Accruals are adjustments made to accounts at the end of each accounting period in order to match expenses incurred with revenues earned during that same period. This helps ensure accuracy when it comes time for preparing periodic financial reports like a balance sheet or income statement. Adjusting journal entries also needs to be performed at month-end close, which involves correcting mistakes made throughout the month such as incorrect postings, double charges or transaction errors.
5. Prepare monthly financial statements.
At the end of each month, businesses should prepare their financial statements including an income statement, statement of cash flows, and balance sheet. This allows the business to review their performance for that period as well as compare actual results against budgeted figures. It is important for the financial statements to be accurate, timely, and reliable in order to gain a realistic picture of the company’s overall finances.
6. Compare actual results to budgeted figures.
When preparing monthly financial statements at month-end close, it is important for businesses to compare their actual performance against budgets established for each category or account. This helps identify any discrepancies between planned and actual performance and can provide key insights into areas where improvements may be needed in order to ensure successful operation of the business.
7. Assess any potential problems or areas of improvement.
During the month-end close process, businesses should take the time to assess any potential problems or areas of improvement in order to make necessary adjustments. This could include examining and resolving discrepancies between actual and expected results, identifying bottlenecks in processes, or checking for compliance with applicable laws and regulations.
8. Take corrective action as necessary.
Once areas for improvement have been identified during the month-end close process, it is important that corrective action be taken as soon as possible in order to mitigate any risks or losses associated with them. This could involve making changes to existing policies and procedures, adjusting budgets accordingly, revisiting internal controls, or implementing additional training programs.
9. Prepare and review any federal, state or local reports.
At the end of each month, businesses should also prepare and review any federal, state, or local tax returns that are due in order to remain compliant with applicable laws. This helps ensure accuracy when filing taxes and can help reduce the risk of penalties for improper reporting or filing. It is important that all required documents be reviewed thoroughly before submitting them to the appropriate authorities.
10. Monitor credit card activity and reconcile monthly statements.
At month-end close, businesses should also monitor credit card activity and reconcile monthly statements in order to ensure accuracy in reporting. This helps to detect any unauthorized charges or invalid transactions that may have occurred during the period and can help reduce potential losses associated with fraudulent activity. Reconciling statements on a regular basis also ensures accuracy when preparing financial reports.
