What should I consider at month end?

Summary

The following steps are accounting procedures that need to be taken into consideration before embarking a month end procedure (e.g. "Bank Reconciliation" & "Stock Journals" etc.).

There are two stages to performing the month end.

More Information

Note: The nominal codes referred to in this article are the defaults that are issued with most systems. Your system may have different codes for the relevant nominal codes.

Stage One

Sales Ledger

All sales invoices and credits should have been posted into the system for the accounting period you are about to close.

Sales Ledger - The Sales Ledger almost takes care of itself because the sales invoices, credits and most payments are all posted from the other modules of the system, Stock Control, Workshop, Unit Sales and Order Processing.

Ensure all receipts into the business, including monies received through point of sale (tills) have been posted onto the system and split into the appropriate control accounts e.g. : -

Z900: Cash
Z901: Cheques
Z902: Credit/debit cards

During the period, the end of day daily takings reports should have been run and balanced to the above control accounts. Any corrections to balance them should also have been made.

See How to deal with end of day till corrections.

Purchase Ledger

Ensure all purchase invoices, credits and payments have been posted onto the system for the accountancy period you are about to close.

For new unit invoices, please ensure you have consulted the Unit integration to nominal ledger article, specifically the section: Operations New Units - When The Unit Is Delivered. You must reconcile the unit sale stock record back to each invoice and perform other crucial checks that will save huge amounts of time if they do not balance once they are in the Nominal Ledger.

Late invoices may be posted after you have closed the period. These will be updated into the next month you close. Please note you may not post into a closed year.

Nominal Ledger

Post any journals required for the accountancy period you are closing off i.e., Wages, Expenses, Pre-payments, Accruals, Depreciation etc.
Post your takings into the bank.
- When you take the takings to the bank you need to journal the appropriate amounts out of the takings centres into your bank account centre, usually 'Z992'.

See The banking journal.

Perform the Bank Reconciliation and reconcile 'Z992'. If you are not using the Platinum Bank Reconciliation program you should still check the balance on the bank account centre, usually 'Z992', against your closing bank statement for the period. Taking into account any uncleared items, they should agree.

Stage One Close Off

At this point you are now ready to complete the Sales Ledger and Purchase Ledger month end procedure. Do not close the Nominal Ledger or run the Monthly Audit and Cash Book print outs because Stage Two may uncover missing invoices and transactions that you may need to post.

Stage Two

At this point the Sales Ledger and Purchase Ledger transactions have now updated the Nominal Ledger.

Go to " Nominal Ledger Trial Balance". This will show you the balance on all Nominal centres as at the end of the month you are closing. Refer to these values for the checks described below.

To see the detail behind any of the values on screen, select the centre then click [View].

Unit & Stock Valuation

You should now perform the stock and unit reconciliations and post any necessary journals to balance the control accounts on the balance sheet.

Perform the unit reconciliation and reconcile the stock of new units and used units to the unit valuation.
- If you are on the automatic cost of sales system; run the Unit Valuation at a Date report and check the balances agree to the nominal balances for stock of new and used units.
- Alternatively please see this article to journal your cost of sales.

Balance your Parts Stock Value nominal code, 'Z922' and post any stock adjustments.
- To achieve this, run the Stock Valuation at a Date report. Check this against nominal centre 'Z922'.
  - If the values do not agree, then post a correcting journal to bring 'Z922' in line with the stock valuation. This adjustment is caused because of stock variances. The other side of the journal would be Stock Adjustments 'Z923'.
- Alternatively please see this article to journal your cost of sales if you are not on the automatic cost of sales system.

Accruals

If you are on the automatic cost of sales system, you should check the balances on your unit 'Z940' and Parts 'Z920' Accruals centres.

They should represent the value of invoices/credits you are due at the month end for units and goods received by the month end, or the value of invoices/credits that have been posted in the accounting period for units or goods not received until the next period.

VAT Control Account

If the month you are closing is at the end of a VAT quarter, balance the V.A.T. control centre 'Z999' to the V.A.T. report.
- Run the VAT 100 report for the quarter.
- Check that "Box 5" agrees with the balance on the V.A.T. control 'Z999'.

If you are not ready to submit your VAT for the quarter do not click [OK] to exit the report. See How do I run the VAT 100 report?.

If you are not at the end of a quarter you may specify a date range to check the balance on 'Z999' at that date. Do not use this method when submitting your VAT Return. Please refer to How do I run the VAT 100 report? for instructions on how to submit a VAT return.

Balance Debtors and Creditors

Balance the Debtors and Creditors to nominal centres 'Z994' and 'Z993'.
- Using the Aged Debtors List and Aged Creditors List that you produced as part of the month end process from the Sales Ledger and Purchase Ledger, check the balance on each of these agrees with the appropriate centre in the Nominal Ledger:

- Aged Debtors List should agree with 'Z994' Sales Control.
- Aged Creditors List should agree with 'Z993' Purchase Control.

Check your takings centres i.e. 'Z900', 'Z901', 'Z902' codes.
- Check the centres look sensible.
- 'Z900' & 'Z901' should almost be zero apart from the money that you still have on-site; the till floats and money not banked.
- 'Z902' should only be the transactions that have not hit the bank yet.
Post any transactions that were missing from the Sales Ledger or Purchase Ledger that you may have uncovered with the above checks and repeat the Sales Ledger and Purchase Ledger month end procedure. Attach the subsequent print outs to the relevant month end folders.

Stage Two Close Off

You may now carry on with the month end procedures from this point onward.

Having done so check the Profit & Loss and Balance Sheet figures are satisfactory.

At the Year End

If this is also the last month of your Financial Year, please make sure you produce an additional copy of these reports as a record of your accounts at the year end:

" Sales Ledger Aged Debtors Listing".
- Select the [Calculational] tab.
Set "Ignore Documents Beyond Current Accounting Period" to 'Y' for Yes.
Click [Print] to print the debt list.

" Sales Ledger Aged Creditors Listing".
- Select the [Calculational] tab.
Set "Ignore Documents Beyond Current Accounting Period" to 'Y' for Yes.
Click [Print] to print the creditors list.

" Nominal Ledger Trial Balance".
" Nominal Ledger Profit & Loss Run Profit & Loss Report".
" Nominal Ledger Balance Sheet Balance Sheet".

See How do I process a year end? for more information.