What Are Financial Closures?
In the end of financial year, it is compulsory for an industrial and commercial enterprise to get a financial closure in order to draw its balance sheet. This process includes taking stocks and generally the statutory auditors need to be present to check the reports and the results of the year-end. The year-end close gives you a “snapshot” of the financial and assets of the company for the accounting year. Accounts in the ledger are in balance, ready to be carried forward to the next year.
Financial Closures Done Every Year have Following Benefits
Tax Compliance – helps determine exact taxable profit, which will help calculate company taxes.
The internal accounting balance analyzes the company's performance and assesses profit or loss. It makes an analysis of the position.
Important Distinctions
- Fiscal year-end date refers to the end of accounting period.
- Getting ready the financial records of an organization at year-end is a Financial Closure.
- Shareholders or partners carry out approval of accounts in the Annual General Meeting.
The period from your financial year-end date until your balance sheet can be prepared is called your financial closure. It is necessary for shareholders or partners to give their approval for the accounts afterwards.
Need Help with Your Year-End Closures ? Our Team Is Here.
End-of-year bookkeeping, draw up official yearly accounts, use during General Assembly approval process.
Interim Financial Statements While annual financial statements are a key part of the management of a business, companies may also choose to prepare interim financial statements, which is a mid-year snapshot of their accounts.
What is an interim financial statement?
Also known as periodic statements, these are money closures within the financial year. The annual accounts ensure the same level of transparency as the final accounts.
Our BDO specialists assure that your accounts maintain consistency and accuracy following the basic principles of accounting.
- Be careful about the risks and uncertainty.
- The accounting periods should be distinct from each other. • Always using the same accounting methods.
- Assets and liabilities are treated separately in this method.
Reason for prepping interim FS
Business leaders often initiate interim statements to monitor the progress of business activities even though it’s optional. They're not sent to tax authorities like year-end closures.
The balance sheet and income statement make up these statements.
- An estimate of the impact of actions taken. Insight into the company’s financial status A basis for setting new goals. Leaders are prepared to make corrective action to avoid likely consequences such as declining profits, dwindling cash flow, or bigger debt.
Temporary monetary reports can proof of monetary reliability for.
- Investors, Creditors, and Suppliers.
These statements show the firm’s capacity to generate cash flows and maintain good financial conditions, inspiring trust and confidence.
BDO France: Support for your financial closings
We make sure your annual or interim financial statements are accurate, compliant, fit for purpose and readily adaptable to the context of your business or its stakeholders.