{"id":"concept:month-end-close","kind":"concept","label":"Month-End Close","synonyms":["monthly close","month end"],"definition":"Month-end close is the routine of reconciling every bank account, categorizing everything still uncategorized, reviewing the profit and loss statement, and then locking the period through its last day.","summary":"Reconcile, categorize, review, lock — in that order. Doing this every month, right when statements arrive, is what keeps a discrepancy a two-minute fix instead of something buried under a hundred later transactions.","explanation":["Month-end close is the recurring discipline of confirming a month's books are actually right before treating that month as finished. It isn't one action — it's a short sequence, and the order matters: reconcile every bank account against its real statement first, categorize whatever transactions are still sitting uncategorized, review the profit and loss statement to make sure it looks reasonable, and only then lock the period through its last day.","Doing this monthly, ideally right when each statement becomes available, is what keeps a small error a light, quick fix instead of an occasional forensic exercise. A transaction that never got categorized, a bank fee that slipped by, a typo in an amount — caught the month it happens, any of these is a two-minute fix; left for a quarter, the same small error is buried under a hundred other transactions.","Reconciliation comes before locking specifically because it surfaces problems while they're still fixable. Locking a period, then discovering a discrepancy, means the fix now has to happen through a reversing entry dated in a later, open period rather than in place — locking after reconciling avoids that entirely.","A month-end routine doesn't require every single transaction to be perfect before locking — it requires confidence that the numbers, taken as a whole, genuinely reflect what happened. Reviewing the P&L specifically is what catches an obviously wrong pattern, like a run of charges all landing in the wrong category, before it becomes a permanent part of a locked, reported month."],"commonMistakes":["Locking a period before reconciling it — reconciliation is meant to come first, so any discrepancy is caught while it's still fixable in place.","Skipping the P&L review step and treating \"reconciled\" as the same thing as \"ready to lock\" — reconciliation only checks bank balances, not whether categorization looks reasonable overall.","Letting month-end close slip to a quarterly or occasional habit — the value comes largely from catching small errors while they're still small."],"category":"close","questions":[{"question":"What order should month-end close happen in?","answer":"Reconcile every account first, categorize what's left, review the P&L, and only then lock the period through its last day — locking is the last step, not the first."},{"question":"Why reconcile before locking instead of after?","answer":"Because reconciliation surfaces problems while they're still fixable in place. Locking first just means a later-discovered discrepancy has to be corrected with a reversing entry instead."}],"url":"/glossary/month-end-close","relatedTo":[{"id":"concept:reconciliation","relationship":"related","weight":0.9,"api":"/api/knowledge/concept%3Areconciliation"},{"id":"concept:categorization","relationship":"related","weight":0.9,"api":"/api/knowledge/concept%3Acategorization"},{"id":"concept:profit-and-loss","relationship":"related","weight":0.9,"api":"/api/knowledge/concept%3Aprofit-and-loss"},{"id":"concept:period-lock","relationship":"related","weight":0.9,"api":"/api/knowledge/concept%3Aperiod-lock"},{"id":"concept:closing-the-books","relationship":"related","weight":0.9,"api":"/api/knowledge/concept%3Aclosing-the-books"},{"id":"guide:how-to-reconcile-a-bank-account","relationship":"references","weight":0.7,"api":"/api/knowledge/guide%3Ahow-to-reconcile-a-bank-account"},{"id":"guide:what-closing-the-books-means","relationship":"references","weight":0.7,"api":"/api/knowledge/guide%3Awhat-closing-the-books-means"}],"referencedBy":[{"id":"concept:fiscal-period","label":"Fiscal Period","url":"/glossary/fiscal-period"},{"id":"concept:adjusting-entry","label":"Adjusting Entry","url":"/glossary/adjusting-entry"},{"id":"concept:closing-the-books","label":"Closing the Books","url":"/glossary/closing-the-books"},{"id":"concept:year-end-close","label":"Year-End Close","url":"/glossary/year-end-close"}],"license":"https://creativecommons.org/licenses/by/4.0/","attribution":"BalanceMCP — https://balancemcp.com"}