9 adjustments to be made in accounting for the year-end closing
Posted: Sun Dec 22, 2024 5:00 am
At a glance, everything you need to know to prepare your accounting and successfully close your annual financial year
Don't forget that each business has its own particular characteristics and you may have to make other types of adjustments, but here we review the most common ones.
We give you some recommendations so that you remember all the documentation you need for the fiscal year closing.
Once the last VAT return of the year new zealand girls whatsapp number and the annual summary have been submitted, we head full steam ahead towards the end of the year , but along the way we find Form 347, which will keep us busy during the month of February. However, this form can help us prepare for the end if it helps us detect errors in the customer and supplier ledgers.
Here is the free guide “10 tips to close your accounting and tax year on a high note” and learn how to get the most out of your accounting and tax closing.
Download your free guide
At this point we can already get an idea of the result of the year , but before closing the accounting and leaving the company accounts ready to transfer them to corporate tax it is necessary to make some adjustments to our accounting, a task that can be easier if we have updated and quality accounting software that makes the task easier for us.
Start of marked textShare! Make sure you have everything in order before closing the accounting for the yearEnd of marked text
Nine steps to follow for year-end closing
Using a trial balance of sums and balances as of the closing date of the accounting year, we can check for inconsistencies in the balances or see accounts that should appear with a zero balance but do not, and it may be necessary to make some adjustments to debug accounting errors .
Reclassifying debts from long-term to short-term is another adjustment that we will have to make, unless we reclassify debts month by month with the payment of loan installments, something that operationally may not be very practical, but which nevertheless indicates to us, in terms of intermediate accounts, the short-term debts at all times.
The variation in stocks to correct the result of the year based on the consumed goods is another adjustment that cannot be missed. To do this, we must be clear that the result of the company is the sum of the income less the expenses, but that the expenses are not the purchases, but the consumption. We must therefore subtract the unconsumed stocks from the purchases made, using for this account (61) or (71) of variation in stocks, or on the contrary, it may happen that in the year we consumed more stocks than we have bought, therefore having to reflect this benefit also through the variation in stocks account.
Another mandatory entry is the amortization provisions for tangible and intangible fixed assets to reflect the wear and tear of the assets and record the corresponding expense.
Provisions of all kinds must be reflected in accounting so that contingencies foreseen for asset depreciation, risks, etc. are recorded.
The accrual of certain income and expenses, such as insurance, where the expense is adjusted to the part corresponding to the year being closed. With the accrual of income and expenses we are making a real distribution in the income statement of the income and expenses that we have in a financial year but that cover one or several years.
Don't forget that each business has its own particular characteristics and you may have to make other types of adjustments, but here we review the most common ones.
We give you some recommendations so that you remember all the documentation you need for the fiscal year closing.
Once the last VAT return of the year new zealand girls whatsapp number and the annual summary have been submitted, we head full steam ahead towards the end of the year , but along the way we find Form 347, which will keep us busy during the month of February. However, this form can help us prepare for the end if it helps us detect errors in the customer and supplier ledgers.
Here is the free guide “10 tips to close your accounting and tax year on a high note” and learn how to get the most out of your accounting and tax closing.
Download your free guide
At this point we can already get an idea of the result of the year , but before closing the accounting and leaving the company accounts ready to transfer them to corporate tax it is necessary to make some adjustments to our accounting, a task that can be easier if we have updated and quality accounting software that makes the task easier for us.
Start of marked textShare! Make sure you have everything in order before closing the accounting for the yearEnd of marked text
Nine steps to follow for year-end closing
Using a trial balance of sums and balances as of the closing date of the accounting year, we can check for inconsistencies in the balances or see accounts that should appear with a zero balance but do not, and it may be necessary to make some adjustments to debug accounting errors .
Reclassifying debts from long-term to short-term is another adjustment that we will have to make, unless we reclassify debts month by month with the payment of loan installments, something that operationally may not be very practical, but which nevertheless indicates to us, in terms of intermediate accounts, the short-term debts at all times.
The variation in stocks to correct the result of the year based on the consumed goods is another adjustment that cannot be missed. To do this, we must be clear that the result of the company is the sum of the income less the expenses, but that the expenses are not the purchases, but the consumption. We must therefore subtract the unconsumed stocks from the purchases made, using for this account (61) or (71) of variation in stocks, or on the contrary, it may happen that in the year we consumed more stocks than we have bought, therefore having to reflect this benefit also through the variation in stocks account.
Another mandatory entry is the amortization provisions for tangible and intangible fixed assets to reflect the wear and tear of the assets and record the corresponding expense.
Provisions of all kinds must be reflected in accounting so that contingencies foreseen for asset depreciation, risks, etc. are recorded.
The accrual of certain income and expenses, such as insurance, where the expense is adjusted to the part corresponding to the year being closed. With the accrual of income and expenses we are making a real distribution in the income statement of the income and expenses that we have in a financial year but that cover one or several years.