An approaching new year gives you as a business the opportunity to measure your performance over 12 months, as well as prepare for the future. Proper end-of-year bookkeeping is necessary for businesses to balance and close their books of the past year. It will then allow them to draft accurate yearly financial reports.
What businesses should be including in their annual bookkeeping
Businesses should take note of the following accounting entries to optimise their annual bookkeeping:
- Currency adjustment
- Provision for unpaid leaves
- Provision for gratuities
- Stock adjustment
- Depreciation calculation
- Amortisation calculation
- Unearned Revenues
Why these particular entries are of importance to businesses
It is necessary for businesses to make accounting estimates in order to better plan for expenses to come such as gratuities or unpaid leave. Although they remain estimations, these coming expenses cannot be forgotten.
Currency adjustments will help to ensure business stability and to neutralise the effects of the variation of exchange rates.
Also, accurate recording of the stocktake, prior to the inventory adjustment in the balance sheet, is necessary to ensure that the business meets its accounting objectives.
Adjustments will also be required for unearned revenues, while the depreciation and amortisation of business assets will require calculation prior to being transferred to the correct accounts, if this has not been done monthly.
End-of-year bookkeeping in the new fiscal context
All these end-of-year adjustments are necessary to keep your books updated and ready for the year to come. But they also are a way for you to get ready for the tax time.
With the new corporate tax coming into effect in June 2023 in the UAE, having updated books is clearly mandatory.
If all these adjustments seem too foggy and technical, CTC Accounting can help you, don’t hesitate to contact us here.