Understanding Adjusting Entries and Why They Matter
Learn how adjusting entries capture revenues and expenses in the correct period. Covers accrued income, prepaid expenses, and common mistakes.
Read MoreYear-End Closing and Audit Preparation in Canada
Practical guidance on adjusting entries, accruals, deferrals, and documentation that gets you audit-ready. Everything you need to close your books correctly.
Essential Resources
Step-by-step guidance for year-end procedures and audit preparation
The Complete Year-End Closing Checklist for Canadian Businesses
Don’t miss critical steps. This checklist covers account reconciliation, adjusting entries, and documentation requirements before audit begins.
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Accruals and Deferrals: Getting the Timing Right
Accrued revenue, accrued expenses, deferred income, prepaid costs—we explain each one with real examples. Auditors always scrutinize these closely.
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Audit-Ready Documentation: What Auditors Actually Need
Organize your records now. We detail which documents auditors request, how to structure your files, and what happens when information’s missing.
Read MoreYour Year-End Closing Process
Follow these steps in order. Each builds on the previous one.
1
Reconcile All Accounts
Match every bank statement, credit card, and subsidiary ledger to your general ledger. Resolve discrepancies before moving forward. This is the foundation.
2
Record Adjusting Entries
Accrue unbilled revenue, recognize accrued expenses, adjust inventory, and record depreciation. Each entry needs documentation supporting the amount.
3
Prepare Trial Balance
Generate an adjusted trial balance showing all accounts and balances after adjusting entries. This should balance—if it doesn’t, find the error now.
4
Organize Audit Documentation
Compile reconciliations, bank confirmations, invoices, contracts, and working papers. Auditors will request these. Having them organized saves time and reduces errors.
Key Areas Auditors Focus On
Prepare these sections especially carefully. Auditors spend the most time here.
Revenue Recognition
Auditors verify revenue was earned and recorded in the correct period. Have contracts, delivery evidence, and customer acceptance documentation ready.
Inventory Valuation
Year-end inventory counts, obsolescence reviews, and cost calculations get detailed scrutiny. Document your counting process and any write-downs.
Fixed Assets and Depreciation
Asset schedules, useful lives, depreciation calculations, and disposals must reconcile. Ensure your depreciation policy is consistent year to year.
Related Party Transactions
Transactions with owners, directors, or related entities need separate disclosure. Document the business purpose and terms for each one.