What should I consider at month end?

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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

Stage One

Sales Ledger

  • All sales invoices and credits have been posted into the system for the accountancy 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.
  • 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 account.: -
Z900
Cash
Z901
Cheques
Z902
Credit/debit cards
  • The end of day daily takings agrees with the above control accounts and any corrections have been made to balance them.

See How to deal with end of day till corrections.

Purchase Ledger

  • All purchase invoices, credits and payments have been posted onto the system for the accountancy period you are about to close.
For the New vehicle invoices, please ensure you have consulted the Vehicle Integration to Nominal Ledger specifically the section "Operations New Vehicles, When The Vehicle Is Delivered" because you must reconcile the vehicle 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.

Nominal Ledger

  • Post any journals required for the accountancy period you are closing off i.e., Wages, Expenses, Pre-payments, Accruals, Depreciation etc.
  • The Banking Journal.
    • 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'.
  • Using the Bank Reconciliation Programme to reconcile 'Z900', 'Z901', 'Z902'.

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 we may need to post.

Stage Two

At this point the Sales Ledger and Purchase Ledger transactions have now updated the Nominal Ledger. We must now perform the vehicle reconciliation and post the necessary journals and balance the control accounts on the balance sheet.

  • Perform the vehicle reconciliation and reconcile the Stock of New Vehicles and Stock of Used Vehicles to the vehicle valuation. Please see Vehicle Integration to Nominal Ledger.
  • Balance the Stock Value nominal code, 'Z922' and post any stock adjustments.
    • To achieve this, run a "Stock Valuation" and check this against 'Z922'.
      • If they 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'.
  • Balance the V.A.T. control 'Z999' to the V.A.T. reports.
    • Run the VAT 100 report for the relevant period, changing the dates if necessary by clicking [Advanced] and entering the date range needed. If the month that you are closing off is at the end of a VAT quarter, there should be no need to change the dates.
    • Check that "Box 5" agrees with the V.A.T. control 'Z999'.
  • Balance the Debtors and Creditors back to 'Z993' and 'Z994'.
    • Using the Aged Debtors List and Aged Creditors List that you produced from the Sales Ledger and Purchase Ledger earlier in the process that will be dated for the end of the month you are closing off, check the balance figure on each of these agree 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.
  • Balance the '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 and attached the subsequent print outs to the relevant month end folders.
  • Produce the Profit & Loss and Balance Sheet and check the figures are satisfactory.

Stage Two Close Off

At this point we have completed all the necessary checks and the Trial Balance, Profit and Loss and Balance Sheet are looking satisfactory, so we are ready to complete the month end.

Please follow the instructions in THIS article for -> Reports & Settings & Nominal Ledger, which completes the month procedure.

See also


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Keywords AND Misspellings
Month, end, journals, accounting, vat, audits, daybook, bank, reconciliation, reconcile, nominal, trial balance, profit, loss, balance
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