Ambrook is built to make day-to-day financial management easier so it’s easy to stay on top of the books. But, at the end of the year, reviewing the books and making sure all the loose ends are tied is still an essential prerequisite for tax time. This article aims to provide a comprehensive overview of how to do the critical review workflows to close out a fiscal year. We will discuss:
The Chart of Accounts in Ambrook
Reconciliation
Reviewing Transactions
Accounts Receivable and Accounts Payable
Inventory Adjustments
Asset Purchases and Disposals
Financial Statements & Exports
Adjusting Journal Entries
Note - Ambrook does not manage payroll, so reviewing payroll records should be done in whatever platform an operation uses. Ambrook does support users making monthly journal entries to track accounts such payroll liabilities, which are likely to be found in the liabilities section of the Balance Sheet. |
Reconciliation
The reconciliation page can be found on both the Ledger and the Accounting tabs. All account types can be reconciled on Ambrook but Bank and Credit cards accounts are shown at the top of the account list.
To begin a reconciliation session:
Select the “Reconcile” button
Enter a starting and ending date for the statement you are reconciling against. Note that for credit cards the value you enter here should be a negative number.
Enter the ending balance on the statement. Ambrook automatically calculates the starting balance for you (see below for more details on how this is calculated).
Optional - Upload a file for the statement you are reconciling against.
At the top of the reconciliations screen you will see:
Starting Balance - This is calculated automatically by Ambrook based on the accounts opening balance and all the transactions and journal entries recorded up to the session starting date. If this number is wrong you should check the opening balance on the account or reconcile prior periods. If the transaction data on your account goes back further in time than you’d like to reconcile, or you’ve reconciled the data in another system, you can contact support to have it removed.
Credits - A count and sum of the credit entries recorded to the account over the date range
Debits - A count and sum of the debit entries recorded to the account over the date range
Reconciled Balance - The ending balance for the account over a date range based on the reconciled transactions.
Ending Balance - The value you entered as the ending balance shown on your statement.
Difference - The difference between the reconciled balance and the ending balance.
Underneath the header details you will see a filtered view of all the transactions and journal entries posted to the account you are reconciling within the date range. To reconcile transactions, click the circle on the right-most column. Once you have reconciled all the transactions, the Reconciled Balance should equal the Ending Balance.
After reviewing all your transactions, if there is an outstanding difference between the reconciled balance and the ending balance you either have extra or missing transactions.
If you are missing transactions, you can manually create transactions from the Ledger
If there are extra transactions, you can exclude transactions from the Ledger
Once you are done with a reconciliation session click “Save” on the top-right of the screen. Ambrook saves a record of reconciliation sessions which you can find by clicking the circular icon next to the “Reconcile” button for the account. On this screen you can find:
The dates of previous reconciliation sessions and who saved them
The statement starting date, ending date, and ending balance
The total lines reconciled
A download of the statement uploaded for a given reconciliation session
Reviewing Transactions
Ambrook makes it easy to review all transactions (incomes, expenses, bill payments, and invoice payments) and journal entries in one place on the Ledger tab. By default, all transactions across all accounts are shown from newest to oldest, but you can use the Filter menu to review transactions a number of different ways. The most commonly used filters include:
Account
Date
Amount
Tag
Contact
Use the “Review” button in the top-left corner to filter only to transactions that are untagged, uncleared, or unrecorded. Note that by default, transactions are automatically recorded; this can be adjusted in settings (read more about recording here). The review button shows a count of the total number of transactions that are left to be tagged.
Accounts Receivable and Accounts Payable
Bills and Invoices are managed on their own pages, which are found on the left-hand navigation bar. On these pages you can view all invoices / bills, or filter into sent, unsent, overdue, and paid. These filters can be used to make sure all the bills or invoices you intended to create or send over the year were actually recorded, and also to follow up on any overdue items to close out the year.
Additionally, you can see if a bill or an invoice has been marked paid but not yet cleared from this page. This can be useful to make sure there are no surprise undeposited or outstanding checks that might impact your taxable income calculations. You can view the details of payments against a bill by selecting the carrot next to a given bill.
Inventory Adjustments
On Ambrook you can manage the dollar value of your inventory as a current inventory account. The value of these accounts need to be updated periodically based on inventory reconciliations, which you can do by creating a Balance Adjustment. To create a balance adjustment:
Go to the Settings menu and select Balances
Find the account you want to adjust and click on it to open the account details
Select “Adjust Balance”
Balance adjustments are recorded as transactions which appear on the Ledger. Once a balance adjustment has been created, it can be tagged the same as any other income or expense transaction.
Asset Purchases and Disposals
Asset purchases and disposals over the course of the year can be identified in Ambrook by using the Balance Sheet report found on the Accounting tab. The balance sheet can be filtered by date range and toggled between accrual and cash basis. If the value of an asset account changes in a given month that means there was a purchase or a disposal allocated to that account. You can click on the account amount for a given month to drill-down into the specific transactions or journal entries being applied to the account.
Financial Statements & Exports
The Accounting tab is where you can find the Profit & Loss (P&L), Balance Sheet, and Exports - a page where you can download a number of additional reports.
Financial Statements:
The P&L and Balance Sheet can be filtered to any date range and viewed on either a cash or accrual basis. These reports will reflect the chart of accounts, managed on the Categories and Balances pages, and also may have a number of system accounts which you can read more about here.
On the report pages, you can click on any category or balance sheet account to open up details about it and make any changes such as:
Editing the section of the P&L account where an income or expense appears
Changing the opening balance on a balance sheet account
The transaction details for any category or account can be reviewed by clicking on the amount in a given month. This details page, you can click on a transaction to open a details pane and retag it without leaving the page. You can also edit the category or account details from this view.
Exports:
In addition to the reports on Ambrook, there are a number of reports that can be exported to CSV files including:
Detailed Profit & Loss and Balance Sheet - for a comprehensive, sharable record of all transactions on all categories and accounts
Statement of Cash Flows - A traditional statement of cash flows
Schedule F Breakdown - A report, available at a summary or detailed level, that shows the total incomes and expenses by form Schedule F box
Expense by Vendor - Used for calculating 1099 amounts
Adjusting Journal Entries
Once you have reviewed the books for the year, you can create journal entries to make any final adjustments that may be needed. From the Ledger, select “New” then “Journal Entry”. Journal Entries on Ambrook require:
Basis - Ambrook supports journal entries on accrual basis only, cash basis only, or both.
Date - The date the entry will be recorded on the books
Line Items - A combination of categories and/or balance sheet accounts that will be impacted by the journal entry. Note, when selecting categories, Journal Entry line items can have enterprise tags applied to them like cash transactions do.