- Monday–Friday, 8:30 a.m.–5:30 p.m.
- Tel: 213-738-6000
- Fax: 213-738-6062
- Email: [email protected]
- 3435 Wilshire Blvd Suite 600, Los Angeles, CA 90010
Reliable Accounting Records Support Better Business Decisions
Bookkeeping records financial transactions, but useful monthly accounting requires additional review, reconciliation, adjustments, and financial reporting.
Reliable accounting records can help management understand business performance, monitor cash flow, prepare for tax filings, respond to lenders or investors, and identify unusual or incomplete transactions before they become larger problems.
The following frequently asked questions explain several important differences between basic bookkeeping, monthly accounting, financial reporting, accounting cleanup, and tax-return preparation.
Bookkeeping focuses on recording and organizing financial transactions. Monthly accounting goes further by reviewing those records, reconciling accounts, making necessary adjustments, and preparing financial information that management can use.
Bookkeeping may include:
- Recording income and expenses
- Categorizing transactions
- Maintaining accounts payable and receivable
- Recording payroll activity
- Organizing supporting documents
- Monthly accounting may also include:
- Bank and credit card reconciliations
- Review of balance sheet accounts
- Adjusting journal entries
- Accruals and prepaid expense adjustments
- Fixed asset and loan activity
- Review of unusual or incomplete transactions
- Monthly financial statements
The scope depends on the company’s size, operations, accounting system, reporting needs, and internal staff.
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Monthly bank reconciliations help confirm that the accounting records agree with actual bank activity and identify missing, duplicated, incorrectly recorded, or uncleared transactions.
Reconciliations may also reveal:
- Unrecorded bank charges
- Duplicate deposits or payments
- Outstanding checks
- Transfers recorded incorrectly
- Transactions posted to the wrong account
- Unauthorized or unusual activity
- Differences between payroll, sales, and cash records
A completed bank reconciliation does not by itself confirm that every transaction was properly classified or supported. The underlying transactions and account balances may still require review.
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Most operating businesses should prepare and review financial statements at least monthly. Some businesses may need more frequent reporting, while smaller or less active entities may use a quarterly schedule.
Regular financial reporting can help management monitor:
- Revenue and gross profit
- Operating expenses
- Cash flow
- Accounts receivable and payable
- Inventory
- Loans and other liabilities
- Owner or shareholder activity
- Budget-to-actual results
- Unusual changes or trends
The appropriate reporting frequency depends on the business, its transaction volume, lender or investor requirements, internal management needs, and tax or compliance obligations.
Financial statements prepared through bookkeeping or accounting services do not provide audit, review, or compilation assurance unless ABC CPAs is separately engaged to perform the applicable service.
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ABC CPAs may assist with bringing incomplete or delayed accounting records up to date, depending on the condition of the records and the available supporting information.
The work may include:
- Reviewing the existing chart of accounts
- Importing or organizing transaction data
- Reconciling bank and credit card accounts
- Identifying missing information
- Correcting account classifications
- Reviewing payroll and sales activity
- Recording loans, fixed assets, and owner transactions
- Preparing adjusting journal entries
- Establishing procedures for future monthly accounting
The time and scope required depend on the number of periods involved, transaction volume, accounting system, quality of prior records, and availability of bank statements, invoices, payroll reports, and other documents.
ABC CPAs may not be able to confirm or reconstruct transactions when sufficient records are unavailable.
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Accurate bookkeeping is an important starting point, but bookkeeping alone may not be sufficient to prepare a complete and accurate tax return.
Tax preparation may require additional review of matters such as:
- Entity classification
- Owner or shareholder transactions
- Loans and capital contributions
- Fixed assets and depreciation
- Inventory
- Payroll and contractor payments
- Business use of vehicles or property
- State and local filing obligations
- Related-party transactions
- Foreign ownership or foreign transactions
- Tax elections, credits, limitations, and carryovers
Financial records may therefore require tax adjustments or additional documentation before a return can be completed.
Tax rules, forms, and filing requirements may change. Applicable requirements should be confirmed for the relevant tax year and the taxpayer’s specific facts.
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The appropriate accounting process depends on the company’s transaction volume, accounting system, internal staff, reporting needs, filing obligations, and condition of its current records.
Contact ABC CPAs to discuss ongoing bookkeeping, monthly accounting, financial reporting, accounting cleanup, payroll coordination, or tax compliance needs.
- Email: [email protected]
- Tel: 213-738-6000
- 3435 Wilshire Blvd Suite 600, Los Angeles, CA 90010
- Monday–Friday, 8:30 a.m.–5:30 p.m.
Resource Center Notice
The information provided in this Resource Center is for general informational purposes and is not intended as legal, investment, valuation, or other non-CPA professional advice. Accounting and tax requirements may vary based on the facts, jurisdictions, entity structure, reporting period, and applicable laws and regulations. Information may also change after publication. You should consult the appropriate accounting, tax, legal, financial, or other professional adviser regarding your specific circumstances. Accessing or using this Resource Center does not by itself create a professional engagement with ABC CPAs.