1. Reconcile All Accounts
This means ensuring that the balances in the accounting records match the actual amounts of money that are owed or are available. This can be done by comparing transactions recorded in the accounting system with those from the bank statement, for example.
2. Verify Account Balances
This means checking that the amounts shown in the financial statements are accurate. This can be done by comparing them to other sources of information, such as past financial statements or budget information.
3. Prepare Financial Statements
The financial statements show a business's overall financial position and performance over a period of time. They include a balance sheet, an income statement, and a cash flow statement.
4. Review and Analyze Results
Once the financial statements have been prepared, they need to be reviewed and analyzed to see how the business has performed over the period covered. This can help identify areas where improvements need to be made.
5. Make Changes as Necessary
If the results of the review show that changes need to be made, then these changes should be implemented as soon as possible. This may involve making adjustments to the budget or changing how certain tasks are carried out.
6. Close the Books for the Month
This means formally recording all of the transactions that have taken place during the month and finalizing the accounting records.
7. Prepare for Next Month’s Close
Once the books have been closed for the month, it's time to start preparing for next month's close. This includes setting up any new accounts that may be needed and gathering any necessary information.