Here's a more detailed version of the Basic Accounting Monthly Closing Checklist

that you can use for practical implementation in your work environment:

1. Bank Reconciliation:

• Download bank statements: Obtain all bank statements from the online
banking portal for the current period.

• Match transactions: Compare each transaction on the bank statement with the
records in the accounting system. This includes deposits, withdrawals, bank
fees, and interest income.

• Investigate discrepancies: Identify and resolve any discrepancies between the

bank balance and the general ledger, such as outstanding checks, deposits in
transit, or unrecorded bank fees.

• Prepare reconciliation report: Document the reconciliation process, including

the list of reconciling items like outstanding checks or bank errors.

2. Journal Entries:

• Accruals and deferrals: Record any accrued revenue or expenses that were
incurred but not yet recorded. Similarly, adjust for any deferred revenue or
expenses.

• Depreciation entries: Calculate and record monthly depreciation for all fixed
assets using appropriate depreciation methods (e.g., straight-line or declining
balance).

• Prepaid expenses: Adjust for prepaid expenses such as insurance or rent,

ensuring that only the portion of the expense applicable to the current period is
recorded.

• Unearned revenue: Recognize earned revenue from previously received

payments if the service has been performed or the product delivered.

3. Accounts Receivable:

• Aging report review: Run an accounts receivable aging report to review

outstanding invoices by age (current, 30 days, 60 days, etc.).

• Follow-up on overdue accounts: Contact customers with overdue invoices to

ensure timely payment and document communication.
 • Allowance for doubtful accounts: Evaluate receivables for collectibility and
adjust the allowance for doubtful accounts if necessary to account for potential
bad debts.

4. Accounts Payable:

• Vendor statement reconciliation: Compare vendor statements with your

accounts payable records to ensure all expenses and liabilities are recorded
correctly.

• Expense verification: Verify that all vendor invoices, employee reimbursements,

and other expenses have been entered into the system for the period.

• Accrue unpaid expenses: Record any expenses incurred during the period that
have not yet been paid (e.g., utility bills, payroll liabilities).

5. Payroll:

• Payroll journal entries: Ensure all payroll journal entries, including wages,
bonuses, and taxes, have been correctly recorded for the period.

• Review tax withholdings: Verify that tax withholdings for employee wages
(income tax, social security, etc.) are accurate and up to date.

• Payroll liabilities: Confirm that payroll taxes, employee benefit contributions,

and other deductions have been recorded and are scheduled for payment.

6. Fixed Assets:

• Update asset registers: Add any newly acquired fixed assets to the fixed asset
register, including asset description, purchase date, cost, and useful life.

• Record disposals: Record the disposal or sale of fixed assets, ensuring that any
gain or loss on disposal is calculated and booked properly.

• Depreciation schedules: Ensure that depreciation schedules are up to date,

and adjust depreciation for any changes in asset status (e.g., retirement or sale).

7. Inventory:

• Physical count verification: Conduct or review physical inventory counts to

ensure that the recorded inventory quantities match the actual quantities on
hand.

• Adjustments: Record any necessary adjustments for inventory discrepancies,

such as shrinkage, obsolescence, or overstock situations.

• Cost of Goods Sold (COGS): Ensure that the cost of goods sold is accurately
calculated for the period based on inventory usage.
8. Liabilities:

• Loan reconciliation: Reconcile outstanding loan balances, including any

principal and interest payments made during the period.

• Credit balances: Review credit card balances and other short-term liabilities to
ensure they are recorded accurately.

• Tax liabilities: Confirm that all tax liabilities (e.g., sales tax, income tax) have
been accrued and scheduled for payment.

9. Expense Review:

• Expense categorization: Review expenses to ensure that they are properly

categorized according to the company’s chart of accounts.

• Review significant expenses: Pay special attention to any large or unusual

expenses and ensure they are properly authorized and recorded.

• Expense accruals: Ensure that any incurred but unpaid expenses, such as
utilities, salaries, or professional fees, are accrued correctly in the current
period.

10. Revenue Recognition:

• Review contracts: Review revenue-generating contracts to ensure that revenue

is being recognized in line with applicable accounting standards (e.g., IFRS 15,
ASC 606).

• Deferred revenue: Recognize revenue that was previously deferred but now
earned, ensuring that the timing aligns with the service or product delivery.

11. Financial Statements:

• Income Statement: Prepare the income statement to show the company's

revenues and expenses over the reporting period.

• Balance Sheet: Generate the balance sheet to reflect the company’s assets,
liabilities, and equity at the end of the period.

• Cash Flow Statement: Produce the cash flow statement to show how changes
in the balance sheet affect the company’s cash position.

12. Analysis:

• Trend analysis: Perform trend analysis on key financial metrics (e.g., revenue
growth, profit margins, expense ratios) to identify any significant changes.

• Variance analysis: Compare actual performance against budgeted or

forecasted figures, and investigate any significant variances.
 • Ratio analysis: Calculate key financial ratios (e.g., current ratio, quick ratio,
debt-to-equity ratio) to assess the financial health of the company.

13. Closing Entries:

• Temporary accounts: Close out temporary accounts (e.g., revenue and expense
accounts) by transferring their balances to retained earnings.

• Review retained earnings: Verify that the closing entries are properly reflected
in the retained earnings balance.

14. Documentation:

• Supporting documents: Ensure all journal entries, invoices, receipts, bank

statements, and other documents are filed and easily accessible for audit
purposes.

• Audit trail: Maintain a clear audit trail by cross-referencing each transaction with
its supporting documentation.

15. Backup and Security:

• Data backup: Perform a complete backup of the financial data at the end of the
month, and store it securely on a cloud server or external drive.

• Access control review: Review the accounting system’s access controls and
restrict access to sensitive information as necessary.

16. Final Review:

• Final walkthrough: Perform a final review of the entire closing process, ensuring
all adjustments, reconciliations, and journal entries have been completed.

• Cross-check reports: Cross-check the financial statements to ensure

consistency and accuracy between the balance sheet, income statement, and
cash flow statement.

17. Reporting:

• Management reports: Share financial reports with relevant management and

stakeholders, including the CFO or CEO.

• Stakeholder queries: Address any questions or concerns raised by

management or external stakeholders related to the financial reports.

18. Compliance:

• Accounting standards: Ensure compliance with local and international

accounting standards (e.g., IFRS, GAAP) and regulatory requirements.
 • Policy updates: Document any changes to accounting policies, procedures, or
regulations during the month.

19. Future Planning:

• Process improvements: Identify inefficiencies in the closing process and

develop plans for streamlining these activities in the future.

• Forecasting: Begin planning for the upcoming months, including revising

budgets or forecasts based on recent performance.

20. Audit Preparation:

• Internal audits: Prepare for any internal audits by ensuring all documentation
and records are organized and accessible.

• External audits: Ensure all necessary information is ready for external auditors,
including financial statements, reconciliations, and supporting documentation.