ReconciledrillMonth-end close checklist
A month-end close runs in order: close the subledgers (sales, purchases, payroll) with proper cutoff, reconcile cash and credit cards, reconcile AR and AP, post accruals, prepaid amortization, depreciation and inventory adjustments, reconcile every balance sheet account, review the P&L for anomalies, then lock the period and issue the reports.
Syntax
Cutoff -> Bank rec -> AR/AP -> Accruals and prepaids -> Fixed assets -> Payroll -> Balance sheet recs -> Review -> Lock period -> Report| Part | What it is |
|---|---|
Day 1 to 2 | Cutoff checks, bank and card reconciliations, invoice and bill entry |
Day 3 to 4 | Accruals, prepaids, depreciation, inventory, payroll journals |
Day 5 | Balance sheet reconciliations, variance review, lock the period |
Owner | Each line has a preparer and a reviewer |
Examples
1. Confirm all sales invoices dated up to the 31st are posted
2. Enter all vendor bills received by the 3rd that relate to the month
3. Reconcile bank and credit card accounts
4. Post rent accrual, utilities accrual, prepaid insurance amortization, depreciation
5. Reconcile AR aging and AP aging to GL
6. Review P&L against budget and last month
7. Lock the period and send the report packResult: A seven-line checklist for a small company, typically done in five working days.
Accrual example inside the close: electricity for the month estimated at 350, bill not yet receivedResult: Dr Utilities Expense 350 / Cr Accrued Liabilities 350, reversed on day one of next month.
Common mistakes
- Starting reconciliations before the subledgers are closed: late invoices then force rework.
- Posting accruals without a reversal: next month's actual bill doubles the expense.
- No period lock: someone posts into a closed month and last month's reports no longer agree with the ledger.
Practice Month-end close checklist
These drills check your answer on live data, free, no account needed.
- Retail month-endClassify every line, enter both adjusted balances, then choose the journal entry the company must record for each item that affects its books.
- Service business closeClassify every line, enter both adjusted balances, then choose the journal entry the company must record for each item that affects its books.
- Rental company closeClassify every line, enter both adjusted balances, then choose the journal entry the company must record for each item that affects its books.
Questions
How long should a month-end close take?
Five business days is a common target for small and mid-sized companies; larger groups aim for three to ten. Consistency matters more than speed.
What is a soft close vs a hard close?
A soft close skips some accruals and reconciliations for speed, usually in non-quarter months. A hard close does everything and locks the period.
Related
- CutoffCutoff means every transaction is recorded in the period it belongs to: sales when goods ship, purchases when received. How to test cutoff and fix an error.
- Accruals at month-endHow to accrue expenses incurred but not yet billed and revenue earned but not yet invoiced at month-end, with worked entries and the reversal next month.
- Balance sheet reconciliationA balance sheet reconciliation supports each ledger balance with independent evidence: a bank statement, an aging, a schedule or a roll-forward. Sign-off.
- Year-end closeThe year-end close adds closing entries and annual tasks to the usual month-end: reconcile every balance sheet account, finalize adjustments, close to equity.