The essential steps for efficient account closing

[shukla7789]

At the end of the financial year, it is necessary to check whether all accounting transactions have been carried out correctly and, on the other hand, whether they correspond to the company's reality. This final check consists of closing the accounts, a fundamental step also to obtain correct data for the preparation of financial statements and the rendering of accounts, which must be done responsibly and correctly.

What is account closing?
Closing accounts, or closing accounts, is the means by which all company accounting records are verified and the relevant accounts are balanced and their balances transferred to the accounts that will give rise to the calculation of results and financial statements.

The closing of accounts is the basis for the company's annual financial statements not only to its partners and shareholders, but also to the State, serving as the basis for the submission of the Model 22 income statement for honduras whatsapp database of IRC and IES/DA (Simplified Business Information) for deposit and publication in the commercial register.

Although the final closing of accounts is carried out once a year, many movements that are part of it must be carried out throughout the year, reducing the slowness of the process.

Documents to consider when closing accounts
Closing accounts, as mentioned, is necessary, among the fulfillment of other obligations, to provide accounts, which, for most companies, include documents such as:

Balance;
Demonstration of results by nature;
Demonstration of changes in equity;
Statement of cash flows;
Demonstration of results by functions (optional);
Annex.
Steps to perform account closing
Each company is different and, therefore, the processes and steps taken to close accounts must be adapted to the reality and size of each one. Even so, there are certain steps that adapt to most organizations, which we list below.

1. Inventory verification
One of the items included in the financial statements is inventories, whether for determining assets in storage or, in the intermittent inventory system, for determining the cost of goods sold and materials consumed (CMVMC), directly related to the determination of profits.

Therefore, it is necessary to physically count all existing goods, raw materials, finished and intermediate products and cross-check them with the values ​​recorded in the accounting records, which must coincide.

2. Asset conference
When closing the accounts for each period, it should be checked whether all acquisitions and disposals of assets are duly recorded in the accounts. Likewise, it should be confirmed whether these are duly included in the depreciation and amortization tables, as well as whether the respective depreciations or amortizations are recorded, which should also be included in the financial statements.

3. Bank reconciliations
The entity's assets and liabilities include bank and cash accounts, the accounting value of which must match the value actually recorded in the statements. Bank reconciliations are carried out to verify and correct any differences, as well as to justify any discrepancies (for example, there may be amounts received by cheque recorded in the accounting records but not yet recorded in the bank statement ) .

These should be carried out for each existing bank account, including savings accounts, credit cards, loans and the like. As for the balance of cash accounts, a physical count of the existing cash and checks should be carried out and adjusted accordingly.

4. Checking customer and supplier balances
The movements of customers' and suppliers' current accounts must be accurately reflected in the accounting records, including invoices and credit and debit notes issued and received and their associated amounts. It is also important to check the age of the amounts owed to see if there are any impairments to be determined.

A good practice with regard to suppliers is to request current account statements from their side and compare them with internal records to ensure that no documents are missing.

5. Verification of personnel accounts
As with customers and suppliers, staff accounts in the accounting department should be checked for payroll processing and associated payments. It is important not to overlook contributions to workers' compensation funds and ensure that they are recorded in the correct accounts.

6. Checking the accounts of the State and Other Public Entities
An extremely important step is to check all calculations and respective payments on the correct dates for all tax headings, including VAT, IRC , IUC, withholding taxes that the company had to make to employees and suppliers, IMI, Single Social Tax and others.