Essential Year-End Bookkeeping Adjustments

November 28, 2017 12:24 pm0 commentsViews: 16

By : Sunil Khullar

adjustmentsAs 2017 is going to end soon, year-end closing of the books is one of the vital concerns for most business owners. The year-end period involves critical accounting works which include sending customer statements, reconciling bank accounts, preparing financial documents, computing year-end taxes, and many others. Accountants and bookkeepers need to record year-end adjustments or journal entries in the company’s books of accounts before the final release of the financial statements. These adjustments usually address the following :

1)   Accrual adjustments for all revenue and expense accounts

2)   Correction of bookkeeping errors

3)   Detection of fraudulent transactions

4)   Proper evaluation of inventory

5)   Accuracy of the year-end Financial Statements

As the regular day-to-day business operations consume most of the time and resources of small business owners, accounting and bookkeeping become neglected. When these tasks are outsourced, the business owner can focus on streamlining the company’s resources and bringing efficiency. The service providers can deliver a diverse range of bookkeeping and accounting services on an annual basis with complete compliance review done at year-end.

AJEThe following are some of the essential year-end bookkeeping adjustments :

1)   Physical Reconciliation

2)   Miscellaneous Reconciliation

  • This includes all types of reconciliation or matching of accounts like bank reconciliation (book records against bank records), accounts receivable from customers, accounts payable to suppliers, accounts with creditors and debtors (loans) and others.

3)   Ledger Analysis

  • This involves an analysis of all subsidiary ledger accounts and the general ledger for possible discrepancies or fraudulent transactions.

4)   Other key adjustments

  • Closing inventory
  • Depreciation
  • Accruals
  • Prepayments
  • Amounts to be written off (e.g. Irrecoverable debt)
  • Deferred revenues and expenditures

5)   Closure of Revenue Accounts

  • After posting all the adjusting entries, all revenue accounts are closed for the year. The resulting net income becomes the bottomline of the Income Statement.

When business owners opt to outsource their back-office operations of bookkeeping, accounting and taxes, they can focus more on their core business and cut on their costs. The business bookkeeping services offered by Outsourced Bookkeeping can assist on these accounting concerns with ease. They provide outsourcing services to small and medium businesses in United States of America. .

 

Sunil Khullar is a Certified Public Accountant equivalent (B.Com.,F.C.A., D..I.S.A.).  As such, Sunil’s experiences include bookkeeping, accounting and tax preparation services to companies in Florida and all the states in the East Coast. He is the founder of Outsourced Bookkeeping.

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