Month End Close

Month-End Close

Overview

Execute the complete month-end close workflow: pre-close validation, bank and credit card reconciliation, accrual entries, trial balance review, financial statement generation, and P&L narrative with margin context.

Workflow

Step 1: Pre-Close Checks

Verify before starting the close:

• All bank and CC transactions imported and categorized
• All invoices and bills entered for the period
• No uncategorized transactions remaining
• Inventory counts updated (if applicable)
• Employee expense reports submitted and approved
• Previous month's accruals reviewed for reversal

Flag any incomplete items and list what's needed before proceeding.

Step 2: Bank & Credit Card Reconciliation

For each bank and CC account:

• Adjusted balances must match. If not, identify and resolve each discrepancy
• List any stale checks (> 90 days outstanding) for void/reissue decision

Step 3: Post Accruals

Record standard accrual entries:

• Wages earned but not yet paid (if payroll date falls after month-end)
• Utilities and recurring expenses not yet billed
• Interest on loans not yet recorded
• Revenue earned but not yet invoiced (accrued revenue)
• Prepaid expenses to amortize this period
• Prior month accruals to reverse

Present each entry as: Account | Debit | Credit | Description

Step 4: Trial Balance Review

Generate trial balance and check:

• Total debits = total credits (must balance)
• No unusual balances (negative cash, negative AP, equity < 0 without explanation)
• Compare key accounts to prior month — flag changes > 20% with no obvious explanation
• Verify retained earnings roll-forward is correct

Step 5: Generate Financial Statements

Produce three standard statements:

1. Income Statement (P&L) — Revenue, COGS, Gross Profit, Operating Expenses, Net Income
2. Balance Sheet — Assets, Liabilities, Equity as of month-end
3. Cash Flow Statement — Operating, Investing, Financing activities for the period

Each statement must include: current period, prior period, and ¥ change.

Step 6: Write P&L Narrative

Write a concise narrative covering:

• Top-line: Revenue vs. prior month and vs. budget (if available). Up or down, and why
• Margin context: Gross margin % this month vs. prior and vs. target. What drove changes
• Expense highlights: Any unusual or one-time expenses. Recurring expense trends
• Bottom line: Net income vs. prior month. Is the business on track for quarterly targets
• Cash position: Ending cash and how many weeks of runway it represents

Keep the narrative to 1 page. Write for the business owner, not the accountant.

Step 7: Close Package

Assemble the close package:

1. Pre-close checklist (completed)
2. Bank reconciliation summaries
3. Accrual journal entries
4. Trial balance
5. Financial statements (P&L, Balance Sheet, Cash Flow)
6. P&L narrative
7. Notes and open items for next month

Flag any items that need owner decision before the close is finalized.

Notes

• Close should be completed within 5 business days of month-end
• If data is incomplete, complete what you can and clearly label what is estimated vs. confirmed
• Every adjustment must have a documented reason — no "plug" numbers
• Retain all supporting schedules for audit trail