The Month End Close is the recurring accounting process of finalizing a company's books for a calendar month, so that the month's financial statements can be produced and relied on.
A typical close includes invoicing customers for the month where billing happens at month end, recording journal entries, reconciling bank and other balance sheet accounts, and performing 📝Accrual Accounting adjustments such as prepaid expenses and 📝Accrued Liability entries. Once total debits equal total credits in the trial balance, the team reviews period-over-period fluctuations and prepares reports for management, investors, and lenders under 📝GAAP or IFRS.
Because the close waits on month-end bank statements and reconciliations, its results usually arrive well into the following month. 📝Weekly Accounting and its 📝Weekly Accounting Practices replace the monthly close with a weekly cadence of bookkeeping, cash forecasting, and metrics review, an argument laid out in 📝The Monthly Close is a Bad Habit.