Month end financial close - process and adjustments

Following are some of the typical month end adjustments to the financial close data:

Accruals: These are expenses or revenues that have been incurred or earned in the current period, but have not been recorded or paid yet. For example, salaries, utilities, interest, rent, etc. Accruals are recorded as liabilities or assets, depending on whether they are payable or receivable.
Deferrals: These are expenses or revenues that have been paid or received in advance, but have not been incurred or earned yet. For example, prepaid insurance, subscriptions, rent, etc. Deferrals are recorded as assets or liabilities, depending on whether they are prepaid or unearned.
Depreciation and amortization: These are expenses that allocate the cost of fixed assets or intangible assets over their useful lives. For example, machinery, equipment, software, patents, etc. Depreciation and amortization are recorded as expenses and reduce the carrying value of the assets.
Bad debts: These are expenses that recognize the loss from uncollectible accounts receivable. For example, customers who default on their payments or go bankrupt. Bad debts are recorded as expenses and reduce the value of accounts receivable.
Inventory adjustments: These are adjustments that reflect the changes in the quantity or value of inventory due to physical count, obsolescence, theft, damage, etc. Inventory adjustments are recorded as expenses.

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