Closing the books in accounting can be a daunting task, particularly if you do not understand what to do. Typically, the accountants have to complete a lot of work within a limited time. Errors may occur during the process and affect the accuracy of the financial records of the organization. In this article, we look at the accounting year-end checklist you can use to complete the process and prepare the books for taxation.
Year-end accounting is the process of closing all accounting records and preparing financial statements. Organizations perform year-end accounting for various reasons. For example, it is necessary to close the books before filing annual tax returns. Also, the year-end closing of books gives you an accurate picture of the financial status of the company.
An accounting year-end checklist is a list of steps and actions you should take to complete the accounting cycle. The end-of-year bookkeeping checklist is important because it helps you to remember all the tasks that you should do. Closing the books in accounting is usually a complex process that includes many tasks. Listing the tasks helps you avoid missing important ones when closing the books.
Closing the books in accounting can be particularly difficult if you do not have experience. An end-of-the-year accounting checklist contains all the things you should do to close the books successfully. Such a checklist simplifies the process even for those who do not have prior experience closing books and preparing financial statements.
This accounting year-end checklist contains the most important things that you should do when closing books at the end of the year. It is useful for ensuring the closing fiscal year bookkeeping procedures are accurate and complete.
Reviewing the accounting books is one of the most important things to include in your end-of-year accounting checklist. Reviewing accounting books is a simple procedure of going through every transaction in the records. The purpose of reviewing books is to ensure the accuracy and integrity of the records during year-end closing accounting. Here are the benefits of reviewing all accounting transactions in the books when closing the fiscal year.
When closing the books in accounting, you can easily miss errors in the original records like ledgers. The first thing in your year-end close checklist should be to review the transactions. Accountants can easily identify errors in the original bookkeeping entries and fix them before finally closing books for the year.
The second benefit of reviewing books as part of the accounting year-end checklist relates to reconciling accounts. Account reconciliation is critical because it helps you to adjust balances in the bank account with those on other financial records. If you do not properly reconcile bank balances when closing the books in accounting, you can end up with inaccurate statements.
Pending or outstanding transactions normally occur in the books. Any good year-end checklist for bookkeepers should help you identify and resolve such pending transactions. Reviewing all the transactions when closing the books in accounting at the end of the year is the perfect way of spotting pending transactions in the records.
Backing up the data is another important item in the accounting year-end checklist. Backing up data about closing the books in accounting means keeping copies of all financial records in a secure location. You should complete this step immediately after reviewing all the financial records when closing books for year-end reporting.
Every financial accounting software has a feature for backing up the data. Our Qbox lets you backup your financial accounting data on QuickBooks in a few simple steps.
Here are some important things to remember when backing up financial records.
Choose the right location for saving your data when closing books for year-end. The best locations are secure, easy to access, and affordable. Many businesses nowadays work with cloud-based storage systems to back up their data. Others still rely on physical hard drives to save copies of their financial data when closing the books in accounting.
A good backup solution for your data should be functional and affordable. You can determine how easy it is to access the backed-up data by testing the solution even before you proceed with closing books. Test how reliable the backup solution is by attempting to access the financial data.
Before closing the books in accounting, consider having several copies of the financial data in different locations. Identifying the need to back up the financial data in your accounting year-end checklist is not enough. Specify the need to have several copies of the data. Using multiple backup solutions assures you of getting the data in case one backup solution fails.
Another important item in your accounting year-end checklist is the actual closing of the accounts. The process of closing the accounts is the focal point of your financial year-end closing checklist. This step entails going to every account on the software and closing or carrying it over to the next year.
Every accounting software has specific instructions on how to close the accounts. The basic thing is to decide whether to close the account for the year or move it to the next one.
A good accounting year-end checklist should contain provisions for reviewing the entries in the financial accounts. Closing the books in accounting using the software can be easy, however, you should remember to review all the entries for possible mistakes.
The reviewing aspect on your accounting year-end checklist or end-of-year bookkeeping checklist means that you should go through all the balances on the financial statements and verify their accuracy. Review the following balances as part of the financial year-end checklist.
The income statement summarizes the financial position of the organization for a year. The statement shows how much money the organization has made or lost during the period. A review of the balances on the income statement is an integral part of the financial year-end closing checklist.
The cash flow statement indicates the movement of money into and out of an organization over a specific period. Cash flow statements have the opening and closing balances for the period they cover. Under your end-of-year bookkeeping checklist, remember to review the balances on the cash flow statement.
Include a review of the figures on your profit and loss account in your end-of-year accounting checklist. The profit and loss reflect the financial position of the organization at the given time. Review the report that the software generates to identify and correct any discrepancies.
Every year-end checklist for accountants should contain procedures for sharing the documents within the team. Specify who will have access to the documents and what roles they should play as you prepare to file taxes and accounting for the following year. Our financial management tool, Qbox, enables accountants and bookkeepers to collaborate during the accounting cycle. Try Qbox now for your first 30 days free.
What is the closing of the books method?
Closing of the books method is an approach that accountants and bookkeepers use to assess and finalize transactions of an organization. The process entails reviewing the balances in the accounts, reconciling accounts, and fixing discrepancies. The accountants also save the data before closing the accounts.
What is done at the end of the year in accounting?
Accountants do a lot of things at the end of the year in accounting. The accounting professionals have to close all the financial accounts of the organization. The accountants must determine whether to close the account or move it to the next year as part of the end-of-year accounting process.
A year-end accounting checklist should guide you on how to close accounts and prepare for the next year. Such a list contains the tasks that accountants must complete to ensure successful and accurate closing of financial accounts. A good checklist should contain the following items: accounts review, data backup, closing of accounts, and review of the balances.