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What are all the "Month End Close" Process?

The month-end close is a process to verify and adjust account balances at period end, to produce reports of a company's true financial position to inform management, investors, lenders, and regulatory agencies.

Why is it necessary to perform a Month End Closure?

Businesses perform a month end close to keep accounting data organized and ensure all transactions for the monthly period are accounted for.

What are the end results of the Month End Closing?

Month end close process enables the accountant to generate accurate and consistent financial statements. It also helps in early identification of any accounting issues, bank related issues rather than at year-end.

Where can you find the Journals to do Month End Closure/Menu Path?

The Journals can be accessed from Finance and Accounting modules.

What are the steps to perform the Month End Closure Process?

Finance

  1. Receipts from Customers
    1. Go to Finance > Transactions> Receipts
    2. Create 1 Journal for each month
    3. Add New Transactions for Receipts from customers
    4. Select a Customer
    5. The outstanding documents - Sales Invoices, Credit Notes (Returns), Customer Deposits (Advance on Sales Orders) will be listed
    6. Select a Payment Method
    7. Enter the Amount, Reference/ Check Number and Date
    8. From the Accounts Details section, select the Transactions against which the amount is received
    9. If excess amount is received, add a new Line and select Miscellaneous Deposits and enter the excess amount
    10. Ensure the DEBIT and CREDIT amounts are BALANCED
    11. Save the Transaction and complete the process
    12. Add New Transactions for other Customers into the same Journal

Payments to Suppliers/Manufacturers

  1. Go to Finance > Transactions> Payments
  2. Create 1 Journal for each month
  3. Add New Transactions for Payments to Suppliers
  4. Select a Supplier
  5. Select a Payment Method
  6. Enter the Amount, Reference/ Check Number and Date
  7. From the Accounts Details section, select the Transactions for which the amount is to be paid
  8. The balance amount can be updated against outstanding PI. The Purchase Invoice Amount will not be changed. Amount entered will be considered as Paid and the Balance amount will be updated accordingly
  9. Ensure the DEBIT and CREDIT amounts are BALANCED
  10. Save the Transaction and complete the process
  11. Add New Transactions for other Suppliers into the same Journal

How to Pay Credit Card Purchases

  1. Trading Purchases ensure Purchase Invoice is created
  2. Go to Finance > Transactions> Payments
  3. Add New Transactions for Payments to Suppliers
  4. For Miscellaneous Purchases that are Direct Expenses, select the option Miscellaneous Payments
  5. Select a Payment Method as CC Purchases. You will not be able to select the Supplier
  6. Enter the Amount
  7. In the Accounts Details section, select Miscellaneous Payments and in the Account column select Ledger Account Code and enter the amount
  8. Ensure the DEBIT and CREDIT amounts are BALANCED
  9. Save the Transaction and complete the process

Accounting

General Journal

  1. New Journals can be created that directly impact the Ledger Accounts. For Example, Entering Opening Balances - Debit Assets, Credit Liabilities, Credit Equity/ Capital, Debit Expenses, Credit Revenue
  2. Additionally, Stock Adjustments, Stock Transfers or Product Cost Adjustment Journals can also created but these journals cannot be modified/ edited since they are associated with Document Reference
  3. AR Aging Account or AP Aging Account cannot be selected since these Ledger Accounts are associated with Customers and Suppliers
  4. Inventory Control Account can be selected with a warning message. Click on YES to continue. By creating Inventory General Journals, the impact will be Inventory value getting updated but the same is not reflected in Stock Reports like Stock Snapshot or Stock as of Date Reports. This is because the General Journal is not associated with any products

Sales Journal

  1. Sales Invoice or Credit Note Transactions when created will create Sales Journals impacting Accounts Receivable, Revenue, Taxes, Cost of Goods Sold and Sales Revenue Account
  2. Sales Transactions will be added into the existing Sales Journal for the month/ period
  3. Sales Transaction Journal cannot be modified/edited as they are created when Invoice is created
  4. Manual Sales Journal can be created for directly impacting AR Aging. For example, Sales Tax has been charged from Sales Invoice and needs to be written off
    1. Go to Accounting> Transactions> Sales Journals
    2. Select the Customer
    3. DEBIT the amount for Refund
    4. CREDIT the amount by selecting the appropriate Ledger Account
    5. Ensure the DEBIT and CREDIT amounts are BALANCED
    6. Save the Transaction and complete the process
    7. This will create a Credit Note
    8. To offset the Customer Balance, this can be adjusted through Receipt Journal

Purchase Journal

  1. Purchase Invoice, Goods Receipt Note or Debit Note when created will create Purchase Journals.
  2. Purchase Transactions will be added into the existing Purchase Journal for the month/ period.
  3. Purchase Transaction Journal cannot be modified/ edited as they are created when Purchase InvoiceI, Goods Receipt or Debit Note are created
  4. Manual Purchase Journal can be created for directly impacting AP Aging. For example, Rent Payable accounted through Accounts Payable
  • Go to Accounting> Transactions> Purchase Journals
  • Select the Supplier
  • CREDIT the amount to be Paid
  • DEBIT the amount by selecting the appropriate Ledger Account
  • This will create a Purchase Invoice
  • Later you can make payment against this Purchase Invoice through Payment Journal.

Accounting Rebates from Suppliers

  1. Go to Accounting> Transactions> Purchase Journal
  2. Create New Manual Purchase Journal 
  3. Select the Supplier/Manufacturer
  4. Change the Transaction Template to Debit NOTE
  5. Enter the Notes if required
  6. In the Account Details section, DEBIT Rebate Amount Received
  7. CREDIT Rebate Amount by selecting appropriate Rebate Ledger Account
  8. Ensure the DEBIT and CREDIT Amounts are BALANCED
  9. Save the Journal which will create Manual DEBIT NOTE
  • Now Rebate Received is Accounted and Supplier Balance will reduce by Rebate Amount
  • Offset Rebate Balance through Payment Journal by selecting the same Supplier, Rebate Debit Note amount and select the Purchase invoices and update Amount.
"Month End Closure" Reports
  1. Lock the Journals at the beginning of the Month
    1. Finance – Receipt and Payment Journals
    2. Accounting – General, Sales and Purchase Journals
  2. Print Journals if required
  3. Generate the following Reports
    1. Reports under Accounting
      1. Income Statement Yearly or Monthly
      2. Trial Balance
      3. Balance Sheet
    2. Reports under Finance
      1. AR Aging Report
      2. AP Aging Report
      3. Sales Tax
      4. Sales Tax Out of State
    3. Reports under Warehouse 
      1. Stock Snapshot Report

NOTE:

  1. All the Journals listed in the above Menu options are Unposted Journals. This allows the user to modify the journals and update.
  2. Suggestion is to POST the Journals of a specific month. For example Journals of July must be posted by the end of August or 1st week of September.  
  3. All Journals must be posted for Year End Closure that is post Auditing the Books of Accounts Fiscal Year must be CLOSED.This will move the values from Expenses and Revenues to RETAINED EARNINGS Account.
  4. Receipts Journal, Payment Journals and General Journals must be posted for Bank Reconciliation. Only Posted Journal Transaction values will be shown for reconciliation.