How to Close the Fiscal Year (Ashad End) in Accounts

Closing the books at the end of Ashad is a process, not an event. Businesses that treat it as a four-week routine finish calmly. Businesses that start on the last day find missing bills, unmatched bank entries and party balances nobody agrees on. Below is a working order for the close, whether you use a ledger book, Excel or accounting software.

Four weeks before: stop the leaks

Start in Jestha. The aim is to make sure everything that should already be in the books is in them.

• Collect all unposted purchase bills, expense slips and petty cash vouchers.
• Ask staff who handle cash or advances to submit their statements.
• Enter pending bank charges, interest and cheque returns from the latest statement.
• List cheques issued but not yet cleared, and cheques received but not yet deposited.

Reconcile cash, bank and stock

Count physical cash on the last working day and compare it with the cash book. Any difference gets investigated and, if it cannot be explained, recorded in a clearly named suspense or difference account rather than hidden. Do the same for every bank account against the bank statement. For stock, plan a physical count close to the year end and compare it to the quantity in your records. Value stock on the method your business follows consistently, and agree it with your auditor.

Match party ledgers

Print or export party statements for the larger customers and suppliers and ask them to confirm the closing balance. Differences usually come from returns, discounts, bills entered in the wrong month or payments in transit. Settle small unresolved differences by a documented adjustment, and keep a note of large ones. This is also the moment to decide on old doubtful balances. Whether and how to write them off is a decision for the owner and the auditor, not the software.

Check VAT and TDS

Compare your VAT sales and purchase registers with the monthly figures you have already reported, and with the VAT accounts in your ledger. Differences should be explainable. Check that TDS deducted from suppliers, salary and rent has been recorded as a liability and that deposits are entered with their dates. TDS withheld from your own customers should sit as a receivable you can show certificates for. Rates and deadlines are set by the Inland Revenue Department, so confirm anything you are unsure about at ird.gov.np or with your tax consultant.

Post year-end adjustments

These are entries that do not come from a bill but still belong to the year:

1. Accrued expenses such as electricity, rent or salary for Ashad that will be paid in Shrawan.
2. Prepaid expenses such as insurance or annual subscriptions paid in advance.
3. Depreciation on fixed assets by the method your accountant follows.
4. Income received in advance or earned but not yet billed.
5. Provisions your auditor asks for, such as staff benefits.

Each should have a journal voucher with a narration that a stranger could understand a year later.

Prepare and review the trial balance

Take the trial balance as of the last day of Ashad. Read it like a story: do the large numbers make sense compared with last year? Is any expense account strangely low or high? Are there accounts with the wrong kind of balance, for example a customer with a credit or a supplier with a debit? Fix the entry rather than the report. Once the trial balance looks right, produce the profit and loss account and balance sheet, and give the auditor the supporting ledgers, bank reconciliations and party confirmations.

Lock the year and carry forward

After the audit adjustments are agreed and posted, lock the old year so no one can change a voucher by accident. Then carry closing balances forward as the opening balances of the new year starting Shrawan 1. In good accounting software this is a guided step: profit is transferred to the capital or retained earnings account, party and bank balances become opening balances, and stock is valued as opening stock. In Excel it means copying values, which is a common place for errors.

Fixed assets and loans

Do not forget the quieter parts of the balance sheet. Update the fixed asset register for purchases, disposals and depreciation, and check that each asset has a bill and a location. For bank loans, compare the principal outstanding in your books with the lender's statement, and separate the interest charged for the year from the principal repaid. Loans from directors or relatives deserve the same discipline: a written balance, agreed by both sides, avoids awkward questions later.

Staff and payroll balances

Check that salaries for Ashad are either paid or accrued, that advances given to staff are listed by name, and that provident fund, social security and tax deducted from salary are recorded and deposited. These small balances are often where auditors find differences, because they are handled by someone outside the accounts team.

What to hand your auditor

A tidy bundle saves days. Prepare the trial balance, ledgers for all major accounts, bank statements and reconciliations, the stock sheet, the fixed asset register, VAT and TDS records, party confirmations, loan statements and a list of any unusual transactions with a short explanation. When the auditor can find things quickly, queries are fewer and the audit finishes sooner.

A one-page closing checklist

Task	Owner	Done
All bills and vouchers posted	Accountant
Cash counted and matched	Accountant and owner
Bank accounts reconciled	Accountant
Stock counted and valued	Store and accountant
Party balances confirmed	Accountant
VAT and TDS ledgers matched to returns	Accountant
Adjusting journals posted	Accountant
Trial balance reviewed	Owner
Year locked and balances carried forward	Accountant

Next step

If every year-end feels like a fire drill, the fix is usually software that keeps the ledgers balanced all year, so the close is mostly review. Look at how WebsNP accounting software handles BS dates, year lock and carry-forward, or if stock is your biggest headache see inventory management software. Send us a WhatsApp message on +977 9846280400 to arrange a demo.

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