As we approach the end of the year, there are a few things to keep in mind regarding your accounting as 2015 winds down and we prepare for the New Year.
After all of your regular day-to-day transactions have been entered, a great place to start is reconciling your bank accounts and credit cards to ensure you’re not missing any transactions as of the end of the year. Another helpful tool is matching general ledger balances to supporting documentation to ensure all business events and transactions have been properly recorded.
To make sure revenue and accounts receivable are accurate, complete your invoicing for the year and evaluate your allowance for doubtful accounts. Review your accounts receivable aging and write off any accounts not likely to be collected as bad debt.
Review your expense accounts for any payments made in advance of services received. If you have paid any expenses in advance (i.e. rent, insurance, etc.), make adjustments to reflect them as a prepaid expense or asset on your balance sheet.
Update accounts payable by locating any bills received and not yet recorded. If a payroll accrual is necessary, calculate accrued wages and accrued vacation expense.
Ensure all fixed assets purchased and disposed of during the year have been recorded appropriately. Calculate the proper depreciation and amortization expense.
Lastly, a great final check is to compare your 2015 operating results to prior year, if you haven’t already done so, to ensure everything looks reasonable. If you use an accounting software such as QuickBooks, net income is automatically closed to retained earnings. Otherwise, once everything is finalized, book your final closing journal entry to close out all income statement account balances to retained earnings.
Although this list is not all inclusive, we hope these pointers will help provide a smoother transition into 2016. Remember, we are always here to help make your busy holiday season an easier one. Happy Holidays!