Accounting is one of the most crucial things for every business; in fact, it is a business necessity for any type of business. The primary reason why accounting is so important is that a company is accountable to its stakeholders and the government. Thus, accounting is the tool by which an organization can prove that business is being carried on fairly and no fraud is being committed by the management at any level. Usually, companies are required to present the report at the end of the year for its whole year business activities. For this, a company needs to undertake the business process known as Year-End Accounting.

What is Year-End Accounting?

Year-End Accounting is the accounting procedure performed at the year-end. The accounts are closed for the respective financial year by carrying forward the balances of the previous year and opening accounts for the next year.

Year-end closing is a very crucial and complex activity for an organization. A slight mistake in the preparation of accounting year end procedures can cost big to the company. Also, it can affect the accuracy of the financial statements of the company which in turn can attract a penalty from the law.

What is the year-end?

The completion of an accounting period is popularly known as year-end. The accounting period does not inevitably relate to the calendar year. For the purpose of the fiscal or financial year in India, the time-period from 1st April to 31st March is considered.

Importance of year-end accounting

A company is accountable for its business activities to its stakeholders since the interest of shareholders and stakeholders is associated with it. Also, a company has to comply with the law of the land and pay various taxes which require the filing of financial reports and documentation with government organizations.

Thus, to prepare all such relevant reports, it is essential to undertake the year-end accounting process.