{"id":4307,"date":"2021-03-12T13:58:16","date_gmt":"2021-03-12T08:28:16","guid":{"rendered":"https:\/\/razorpay.com\/learn\/?p=4307"},"modified":"2022-12-23T00:17:55","modified_gmt":"2022-12-22T18:47:55","slug":"a-complete-guide-to-closing-your-accounting-books-for-fy-2020-21","status":"publish","type":"post","link":"https:\/\/razorpay.com\/learn\/business-banking\/a-complete-guide-to-closing-your-accounting-books-for-fy-2020-21\/","title":{"rendered":"A Complete Guide to Closing Your Accounting Books for FY 2020-21"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">The financial year-end is right around the corner &amp; a crucial step in getting ready for it is closing the accounting books. It helps you generate a summary of all the <a href=\"https:\/\/razorpay.com\/learn\/balance-sheets-types-objectives-formats\/\" target=\"_blank\" rel=\"noopener noreferrer\">financial statements<\/a> that will help you understand your business\u2019s financial health and make strategic decisions to unlock new growth opportunities.\u00a0<\/span><\/p>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_80 counter-hierarchy ez-toc-counter ez-toc-transparent ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69d23c92ab532\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69d23c92ab532\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/razorpay.com\/learn\/business-banking\/a-complete-guide-to-closing-your-accounting-books-for-fy-2020-21\/#How-to-close-your-accounting-books\" >How to close your accounting books<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/razorpay.com\/learn\/business-banking\/a-complete-guide-to-closing-your-accounting-books-for-fy-2020-21\/#Calculate-the-yearly-revenue-expenses\" >Calculate the yearly revenue &amp; expenses\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/razorpay.com\/learn\/business-banking\/a-complete-guide-to-closing-your-accounting-books-for-fy-2020-21\/#Raise-all-sales-invoices-for-FY-2020-21-before-31st-March-2021\" >Raise all sales invoices for FY 2020-21 before 31st March 2021<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/razorpay.com\/learn\/business-banking\/a-complete-guide-to-closing-your-accounting-books-for-fy-2020-21\/#Update-the-fixed-asset-register\" >Update the fixed asset register\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/razorpay.com\/learn\/business-banking\/a-complete-guide-to-closing-your-accounting-books-for-fy-2020-21\/#Make-a-provision-for-depreciation\" >Make a provision for depreciation\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/razorpay.com\/learn\/business-banking\/a-complete-guide-to-closing-your-accounting-books-for-fy-2020-21\/#Make-a-provision-for-expenses-for-which-vendor-bills-are-not-received\" >Make a provision for expenses for which vendor bills are not received<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"How-to-close-your-accounting-books\"><\/span><b>How to close your accounting books<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<h3><span class=\"ez-toc-section\" id=\"Calculate-the-yearly-revenue-expenses\"><\/span><b>Calculate the yearly revenue &amp; expenses\u00a0<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">You should keep track of the total revenue made during the year, along with the cost incurred for running your business. Also, ensure that the revenue and expenses are recorded in the accounting books accurately. This helps you prepare a Profit &amp; Loss statement for your business while finalising the financial reports.\u00a0<\/span><\/p>\n<p style=\"text-align: center;\"><a style=\"border-radius: 3px; background: #528FF0; padding: 15px; font-weight: 600; cursor: pointer; text-decoration: none; color: white;\" href=\"https:\/\/razorpay.com\/x\/?r=blog_cta_business_banking_guide_to_close_accounting_books&amp;utm_source=blog&amp;utm_medium=cta\" target=\"_blank\" rel=\"noopener\" data-schema-attribute=\"\">Join RazorpayX!<\/a><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Raise-all-sales-invoices-for-FY-2020-21-before-31st-March-2021\"><\/span><b>Raise all sales invoices for FY 2020-21 before 31st March 2021<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">All startups need to follow an accrual accounting system, which means you need to issue invoices once services are rendered or work order is executed. <\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Update-the-fixed-asset-register\"><\/span><b>Update the fixed asset register\u00a0<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">All businesses are allowed to claim depreciation on Fixed Assets. Hence, it is important that you maintain a Fixed Asset register that provides the details of when the asset was used, and accordingly, calculate the depreciation.\u00a0\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">An updated fixed asset register will not only ensure that your business is compliant but will also help with long and short-term business planning.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Make-a-provision-for-depreciation\"><\/span><b>Make a provision for depreciation\u00a0<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Businesses are allowed to calculate depreciation on <a href=\"https:\/\/razorpay.com\/learn\/business-assets-definition-types\/\" target=\"_blank\" rel=\"noopener noreferrer\">Fixed Assets<\/a> as per the Income Tax Act and Companies Act, depending on the entity type. But, only depreciation calculated as per the Income Tax Act is <\/span>tax-deductible<span style=\"font-weight: 400;\">.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">However, depreciation under the Companies Act 2013 has to be calculated for financial reporting purposes by businesses. So, you should calculate &amp; make a provision for depreciation before closing your accounting books.\u00a0<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Make-a-provision-for-expenses-for-which-vendor-bills-are-not-received\"><\/span><b>Make a provision for expenses for which vendor bills are not received<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Since businesses have to maintain accounting books on an accrual basis, it is important for expenses where bills are not received by the year-end, you make a provision for those expenses in March itself.\u00a0\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Closing the accounting books is just one step in getting ready for the next financial year.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In our latest e-book, we have compiled everything you need to do to close the financial year seamlessly.\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>A crucial step in getting ready for the financial year-end is closing the accounting books. Read on to know how to do that seamlessly &#038; error-free. <\/p>\n","protected":false},"author":151156479,"featured_media":4312,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3437,3370],"tags":[],"class_list":{"0":"post-4307","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-banking","8":"category-resources"},"_links":{"self":[{"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/posts\/4307","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/users\/151156479"}],"replies":[{"embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/comments?post=4307"}],"version-history":[{"count":5,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/posts\/4307\/revisions"}],"predecessor-version":[{"id":7314,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/posts\/4307\/revisions\/7314"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/media\/4312"}],"wp:attachment":[{"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/media?parent=4307"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/categories?post=4307"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/tags?post=4307"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}