Accounting procedure is the system or processes of recording and reporting financial information. Accounting procedures varies according to the time of the year whether it is the beginning or the year end. The end of the year is the time that businesses close their account and start preparing for the statutory audit. Accounting procedures for the year end provides opportunity for businesses. In your business, this last quarter should be used to assess tidy up your accounting.
The review of your accounts before year ends always make it possible to make decisions that will affect profitability. growth and tax liability. Once the year ends, it becomes difficult, due to getting things in place for the new year. Book an appointment with your accountant to review your financials. It is advisable to adopt the following steps in reviewing your accounting year end procedures
Let the statement of financial position be the starting point
Examine in detail all the items in your financial statement . In simple terms, assets are what you have. Liabilities are what you owe, and can be verified with loan statements or credit card statements. Equity is the difference between assets and liabilities.
- Make sure all items on financial position are properly categorised
- Ensure all assets appear in the statement of financial position and at the correct position.
- Reconcile all bank accounts whether it is current or savings accounts.
- Examine your accounts receivable and do their age analysis. If there uncollectible receivables, write them off to bad debt.
- Let every non-current assets like property, plant and equipment be in the appropriate asset section. Details of each category of assets must specified by way of lists and that it matches the total in the statement of financial position.
- Any item of property plant and equipment sold during the year, must be properly treated by recognizing the gain or loss on the sale and properly recorded.
- Any variation in the purchase of the property, plant and equipment must be observed and such asset must be recorded accordingly.
- Ensure there is proper calculation of depreciation/amortization of all assets with specific entry to each assets caterogy. It’s easy to disregard these costs since they didn’t come in the form of one identifiable purchase, but calling them out on your balance sheet will guarantee that you account for ongoing, accumulated expenses.
- Arrange and ensure stock count is carried out, and that the actual value of your inventory is accurate on your balance sheet.
- Ensure all liabilities are listed and the outstanding balances as at year-end statements confirmed by lenders.
- Ensure that interest expense in the income statement is the same as the actual interest portion of your liability that you paid during the year.
- Examine your payroll tax liabilities, any error observed should be corrected. Where the payroll is outsourced , double-check that the liability accounts have a balance of zero at the end of the year.
- Examine the in and out movement in equity to determine where they came from. In the case of enterprise, examine the injection and withdrawals of each of the partners.
- Retained earnings is a real number that reflects the accumulated profit and loss from the beginning of your company’s operations. Check with your accountant to make sure this number is accurate.
- Where the business outsourced the payroll, examine all monthly report and all correspondence between both parties.
Income and expenses
- Ensure all sales were captured during the year..
- Ensure any returns, discounts, or write-offs are included in bad debt.
- Ensure invoices are raised for all of your year-end expenses.
- Detailed examination of your direct cost and expense accounts. The reason for this is to ascertain if there is anyone unusual.
In conclusion, ensure you backup.
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