Why it matters
A close that happens on time gives the owner a current profit and loss, a balance sheet that agrees to the bank, and a clean starting point for the next month. A close that slips turns every later month into a catch-up, and the tax return starts from books nobody trusts.
Example
A client's bank statement ends on the 31st. The bookkeeper matches every deposit and payment, records the missing receipt for a $240 software charge, books the payroll accrual, reconciles the loan, and sends the owner a profit and loss by the 10th of the next month. That is the close.
Related terms
Questions about Month-end close
What happens during the month-end close?
The firm reconciles each account, records missing transactions, posts adjusting entries, reviews the profit and loss and balance sheet, and locks the period. The exact steps depend on the client's accounts and the firm's process.
How long should a month-end close take?
A small client with few accounts can close in a few hours once the statements and records are in. A larger client with payroll, inventory and multiple accounts can take several days. The client's response time is usually the biggest variable.
Why does the close depend on client documents?
The bank feed shows the amount but not always the reason. The statement, the receipt or the payroll report explains what the transaction was, so the firm can record it correctly instead of guessing.