The annual cut-off will be on the 31st of December 2018, and it’s approaching fast. The annual closing requires following certain procedures and to keep things running smoothly, both your paperwork and inventory must be checked. Below, we will go through the basics of the closing procedure – keep reading, so you can start preparing in time!
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A year-end closing is an accounting procedure undertaken, as the name suggests, at the end of the year. The incentive of the procedure is to close out business from the previous year. This also involves carrying forward balances from the previous year, and opening posting accounts for the upcoming year. The closing procedures allow a company to reconcile expenses and revenues, to create profit and loss statements, but also other necessary filing documents and financial statements.
In order to complete the procedure, the accountants would need all the accounting documents and information of the current year. This includes documentation on all incomes, revenues, costs and expenses that belong to 2018. Legal documents, such as fapiao and receipts, must support the data. For revenues, costs and expenses for which there are no tax invoices issued yet, supporting documents are needed – these can be receipts, contract, purchase orders etc.
Costs or expenses which belong to the calendar year of 2018 – remember to collect and present all the necessary fapiaos for the annual closing!
Same applies to revenues – track all the services rendered, and goods sold within the current year! The following situations would belong to 2018:
Companies with a goods inventory must provide an accurate overview of their inventory status. This step usually involves a stock take with external auditors. What to be cautious of when it comes to inventory check:Goods in the inventory do not have an invoice yet and/or have not been paid for.
Pay close attention – all the transactions and entries must be supported by documents, e.g. contract, receipt, invoice, purchase order, etc. If the supporting documents are missing, accurate accounting entries are not possible.
The points above are basic suggestions to keep in mind for the upcoming annual closing. Remember, the above procedure is to provide a true representation of your firm’s financial performance. We suggest starting early to ensure all your paperwork is in check!
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