Part 2 · Running the business · Chapter 2.12
Closing the day, the month and the year
Draft: the wording may change.
The idea
A shop does not leave its shutter half open at night. The books need the same habit. At the end of every day, every month and every year: count what you have, record what is missing, then lock the period so nobody changes it quietly. Pulling down the shutter is the same three steps, at three sizes.
The three closings
| Count | Record | Lock | |
|---|---|---|---|
| Day | Cash in the drawer; vans settled | Every bill, receipt, return and expense of the day entered | The day's cash sheet signed; no back-dated entries |
| Month | Bank statement matched; fast-moving stock counted | Missing bills, bank charges, salary, rent, supplier credit notes | Month locked once the GST return is filed |
| Year | Full stock count; party balances confirmed | Depreciation, year-end adjustments, closing stock value | Year locked once the accounts are final |
At the counter
The day. At 8 pm the office checks: every van settled (chapter 2.10), cash counted against the receipts (chapter 2.4), every order billed or marked pending, every collection entered against its bill. The day's report goes to the owner (chapter 2.11). Anything not finished goes on a written list for the morning, with a name against it.
The month. In the first week of the next month:
- Match the bank statement line by line (chapter 1.11).
- Enter what only arrives at month-end: rent, electricity, bank charges, salary and incentives (chapter 2.7), the company's credit notes.
- Send statements to the top retailers and to each company; settle differences (chapter 1.18).
- Count the fast-moving products (chapter 2.3).
- Check the trial balance is level (chapter 1.8).
- File the GST returns (chapter 2.6).
- Lock the month.
The year. The financial year in India runs from 1 April to 31 March. On 31 March, count every product in the godown and the vans, by batch. Confirm balances with all companies and the larger retailers. The accountant posts depreciation and the year-end adjustments. The closing stock and party balances become next year's opening balances. When the accounts are final and the returns are filed, lock the year.
Why lock
Once a month's GST return is filed, the books for that month must stay exactly as filed. If someone edits a September bill in November, your books no longer match what the government has. Locking stops this. A mistake found later is fixed with a credit note, debit note or journal entry in the current month — never by reopening the old one (chapter 1.14).
Common mistake
Keeping the month open "for a few more bills". A late purchase bill is added into September after September's return is filed. Now the books show input credit that the return did not claim, the bank match no longer agrees, and next month's figures start from a wrong base. Close on time. Late documents go into the month they arrive in, with a note.
Where you'll use this
In Part 3, the company runs its own month-end: targets close, schemes end, claims have a cut-off date. A stockist whose own month closes cleanly sends claims on time and with the right numbers. Part 4 shows how software locks a period so nobody can change it by accident.
Check yourself
- What are the three steps of every closing?
- Why lock a month once its GST return is filed?
- A September bill is found in mid-November. Where does the correction go?
Answers
- Count, record, lock.
- So the books always match what was filed, and nobody can change a filed month quietly.
- In November, the current period, with a note — not by editing or reopening September.