The month-end close is a sequence: record everything that belongs in the period, prove each balance against an independent source, explain what moved, then lock the books. The terms below cover that sequence from cut-off to sign-off. Each one includes a worked example, because definitions only help when you can see the numbers. If you're building or tightening a close, start with the month-end close checklist (/resources/month-end-close-checklist), then use this page as the reference your team points to when someone asks what "tied out" really means.
Month-end close
Also called: monthly close · financial close
Definition. The steps a finance team runs after each month ends to record, reconcile, review and lock that month's transactions so the financial statements are complete and accurate.
In practice. Most closes follow a fixed order: cut-off and accruals, subledger close, account reconciliations, flux review, adjusting entries, review and sign-off, then reporting.
What a reviewer checks. Every step has an owner, a completion date and evidence, and nothing posted to the period after it was locked.
Definition. The schedule that assigns each close task to an owner and a business day after month-end (BD1, BD2 and so on).
In practice. BD3 bank reconciliations complete · BD5 flux review · BD6 CFO sign-off. Teams build it backward from the hardest deadline, usually the board pack or lender report.
What a reviewer checks. Planned against actual completion for each task, and which tasks slip every month.
Definition. The full task list for a close, showing owner, due day, preparer, reviewer and status for each item.
In practice. A mid-market company typically runs 40 to 150 tasks grouped by area: cash, AR, AP, payroll, revenue, fixed assets and equity. Our free version: /resources/month-end-close-checklist.
What a reviewer checks. Sign-offs are dated on or before the reporting date, and the reviewer is a different person from the preparer.
Definition. The number of business days from month-end to the point the books are locked for reporting.
In practice. October ends on Saturday 31 Oct. If the books lock on Friday 6 Nov, that is a 5-business-day close. Track your own trend before comparing to anyone's benchmark.
What a reviewer checks. Whether a faster close came from fewer late adjustments, or from skipped reviews.
Definition. A lighter close for interim months, where low-risk accounts are rolled forward on schedule instead of fully reconciled, with a full "hard close" at quarter-end or year-end.
In practice. A small prepaid insurance account is amortized on schedule monthly and fully reconciled each quarter.
What a reviewer checks. A written policy listing which accounts are soft-closed and why, and proof that nothing material sits in them.
Definition. Comparing the cash balance in the general ledger with the bank statement for the same date and explaining every difference until the two adjusted balances agree to the cent.
In practice. Ledger $184,220.14, bank $191,035.40. The difference is explained by outstanding checks, deposits in transit and a bank fee not yet booked. After those items, both sides show the same adjusted balance.
What a reviewer checks. The statement balance agrees to the bank's own statement, and each reconciling item clears in the following month.
The Yoraito angle. Each match carries the SQL that paired the bank line with the ledger line, so a reviewer can rerun it and get the same pairing.
Definition. Proving that a balance sheet account's ledger balance is supported by an independent source such as a subledger, schedule, statement or calculation.
In practice. Accrued payroll is supported by the payroll register; fixed assets by the asset register; loans by the lender statement.
What a reviewer checks. The support is dated the same day as the ledger balance, and any unexplained difference has a reason, an owner and a due date.
Definition. A check recorded in the ledger that the bank has not yet paid at the statement date.
In practice. Outstanding checks are subtracted from the bank balance on the reconciliation.
What a reviewer checks. Each one clears on the next statement. Stale checks, often six months or older, are reviewed for voiding or for unclaimed-property rules.
Definition. Agreeing a number to the same number in its source, exactly.
In practice. Tie the AR aging total to the AR control account. Tie revenue on the board deck to the income statement. A tie-out passes only when the difference is $0.00.
What a reviewer checks. The source is independent of the number being tested, and the tie is to the cent, not "close enough".
The Yoraito angle. Tie-outs run as a query that returns the difference. Rerun it and you get the same zero, or the same exception.
Also called: fluctuation analysis · variance analysis
Definition. Comparing account balances between periods, or against budget, and explaining every change above a set threshold.
In practice. Marketing expense is up $48,200 (31%) month over month. Explanation: annual conference sponsorship invoiced in October, see invoice INV-2291.
What a reviewer checks. Each explanation is specific and backed by a document. "Increased due to higher spend" restates the number; it doesn't explain it.
Definition. A payment made in advance for goods or services used in future periods. It sits on the balance sheet as an asset and is expensed over time.
In practice. $36,000 paid in January for annual software is expensed at $3,000 a month.
What a reviewer checks. The prepaid rollforward (opening + additions − amortization = closing) agrees to the GL.
Also called: unearned revenue · contract liability
Definition. Amounts billed or collected for goods or services not yet delivered. It is a liability until the revenue is earned.
In practice. A $120,000 annual subscription billed upfront is recognized at $10,000 a month. Under ASC 606 the unearned balance is a contract liability.
What a reviewer checks. The deferred revenue rollforward ties to the GL, and recognition follows delivery of each performance obligation.
