Before closing a month's books, check that your records cover the whole period, explain differences between the books and statements, and leave a clear list of unresolved questions. A repeatable review is more useful than a report that looks tidy while hiding missing information.
The IRS describes good records as support for monitoring a business, preparing financial statements and substantiating tax return entries. It allows a recordkeeping system suited to the business that clearly shows income and expenses. IRS recordkeeping guidance
Do you have every statement for the period?
Start with an account inventory: business bank accounts, credit cards, payment processors and loans. Mark which statements have arrived and which period each covers. If an account opened or closed during the month, leave a note so it does not disappear from the review.
Create a short handoff sheet rather than relying on a conversation from memory. List the account, latest statement date, person responsible and any open question. Your accounting service discussion can then start with the actual state of the records.
Can you explain the differences?
Compare the records with the relevant statements and investigate unmatched items. Look for a transaction entered twice, a payment assigned to the wrong period or an item that has not cleared. Keep the explanation with the review so that another person can follow it later.
Do not create an unexplained adjustment simply to produce a zero difference. If the cause is uncertain, label the issue and ask for help. A clear unresolved question is easier to investigate than an adjustment with no supporting story.
| Review area | Question to answer | Useful handoff record |
|---|---|---|
| Accounts | Are all accounts included? | Account inventory |
| Differences | Why do the records disagree? | Reconciliation notes |
| Open items | What still needs a decision? | Question list with an owner |
| Reports | Which period and method do these show? | Dated report set |
| Follow through | Who will finish the remaining work? | Next action and target date |
Are business and owner transactions clearly identified?
Flag transfers, owner contributions, withdrawals and purchases that need clarification. Give the accountant the facts of the transaction rather than guessing a category from the bank description. A bank memo that says "transfer" rarely tells the whole story.
For each question, note the date, amount, account and business purpose as you understand it. Keep receipts or other supporting records available. The IRS explains that purchases, sales and payroll generate supporting documents used to record transactions in the books. IRS recordkeeping guidance
Do the reports answer the decision you are making?
A profit report and a bank balance answer different questions. The SBA explains that cash and accrual accounting recognize transactions at different times. Understanding the method behind a report helps you interpret it. SBA business finance guidance
Write down the decision before asking for a report. If you are considering a purchase, you may need to discuss payment timing as well as reported profit. If collections are slow, list outstanding customer invoices and their expected payment dates. Those are useful starting points for a cash flow conversation.
Who owns the remaining questions?
End the review by assigning a person and a next action to each open item. Separate a missing statement from a question about accounting treatment. The first might need a download; the second may need professional judgment.
A useful month end handoff says what is complete, what remains open and where the supporting records are.
If the same problem returns every month, ask whether the issue is in the workflow, account setup or staff training. You can discuss it through the QuickBooks services page.
Contact the office with the reporting period and the main question your books need to answer. A short account of the problem helps frame the next step.
Frequently asked questions
Does a bank balance tell me whether the business made a profit?
No. The bank balance shows cash at a point in time. Profit reporting depends on income, expenses and the accounting method used.
Should I change a transaction just to make reconciliation work?
Investigate the difference and keep a record of the explanation. Ask your accountant before using an unexplained adjustment.
Sources
About the author
Craig L. Elggren, CPA, PC is a Gilbert accounting practice. This article offers a general framework for organizing bookkeeping questions and does not prescribe an accounting method for a particular business.