Year-End Close: A Checklist for Agricultural Producers

Year-end close is the process of finalizing your farm or ranch’s financial records for the year so they accurately reflect what happened—and set you up for better decisions going forward. For agricultural producers, it’s more than an accounting exercise: it’s also a chance to reconcile inventories, evaluate enterprise performance, prepare for taxes and give lenders and advisors a clear picture of the operation.

1. Prepare your records before you start

Before making adjustments, make sure all routine activity for the year is recorded.

• Enter all income and expense transactions through year end

• Confirm bank and credit card activity is complete

• Post payroll entries and benefits

• Record loan payments, including interest and principal splits

For livestock operations, double-check that feed purchases, vet bills, trucking, and yardage are fully recorded. Missing transactions at this stage create bigger problems later.

2. Reconcile bank accounts and loans

Reconciliation ensures your books match external records.

• Reconcile all checking and savings accounts

• Reconcile credit cards used for farm expenses

• Reconcile operating loans and term debt

For producers using multiple accounts (operating, cattle purchases, feedlot settlement accounts), this step is especially important. Loan balances should match lender statements exactly at year end.

Read more: What Is a Bank Reconciliation, and How Does It Work?

3. Verify accounts receivable and payable

Year end close should reflect what you are owed and what you owe.

• Review outstanding livestock, crop, or milk sales not yet paid

• Confirm unpaid bills for feed, fuel, custom work, and veterinary services

• Remove old or incorrect balances

This step supports accrual adjustments and improves the accuracy of your income statement, particularly for feedlots and dairies where sales and expenses often cross calendar years.

4. Count and value inventories

Inventory is one of the most important — and most error-prone — areas in agricultural accounting.

Livestock inventory

• Count animals by class (cows, calves, feeders, replacements)

• Verify numbers against production records

• Apply consistent valuation methods

Cow-calf and feedlot operations should clearly separate breeding stock from market animals. Dairy operations should distinguish between mature cows and replacement heifers.

Feed and supply inventory

• Measure hay, silage, grain, supplements, and mineral

• Inventory fuel, chemicals, and supplies

• Assign reasonable year end values

Crop producers should also inventory harvested grain and inputs on hand. Accurate inventory changes can significantly affect reported profit.

Read more: Farm Inventory Accounting 101

5. Record depreciation and asset changes

Fixed assets must be updated before closing the year.

• Record depreciation for equipment, buildings, and breeding livestock (if applicable)

• Remove assets sold, traded, or scrapped

• Add new purchases placed in service during the year

Depreciation affects both tax planning and management analysis, so consistency year to year is key.

Read more: A Simple Guide to Depreciation and MACRS

6. Make accrual adjustments

Accrual adjustments align income with the expenses that produced it.

Common adjustments include:

• Accounts receivable and payable

• Inventory changes

• Prepaid expenses

• Accrued interest

For example, feed purchased late in the year but not yet used should remain in inventory rather than expense. Accrual adjustments are critical for comparing profitability across years and across enterprises.

7. Review income and expense categories

Before finalizing reports, review your chart of accounts.

• Check for misclassified expenses (repairs vs improvements, feed vs supplies)

• Confirm enterprise coding where applicable

• Look for unusually large or missing balances

Livestock producers should confirm that feedlot, cow-calf, dairy, and crop expenses are allocated correctly to support enterprise analysis.

Read more: Building a Chart of Accounts that Works for You

8. Generate and review financial statements

Once adjustments are complete, generate year end reports.

• Income statement

• Balance sheet

• Cash flow summary (optional but recommended)

Review these with an eye toward:

• Overall profitability

• Changes in working capital

• Debt levels and leverage

• Enterprise performance

Comparing results to prior years and benchmarks adds context and value.

9. Prepare for taxes and lender reporting

Year end close feeds directly into tax preparation and financial reporting.

• Provide final reports to your tax preparer

• Share lender-ready statements if required

• Document assumptions used for inventory and accruals

Clean, well-documented records reduce tax prep time and improve credibility with lenders.

10. Back up your data and document the close

Before moving into the new year:

• Back up accounting files and supporting documents

• Lock or close the fiscal year in your software

• Save copies of final reports

This protects historical data and prevents accidental changes after the fact.

Ambrook helps you close the books with confidence

Year end close is not just about finishing the books — it’s about understanding how your operation performed and positioning yourself for the year ahead.

With time-saving bookkeeping automation features, streamlined bill pay and invoicing, and other powerful accounting and financial management tools, Ambrook doesn’t just make staying on top of your numbers easy: it takes the guesswork out of running your business. Curious to learn more? Schedule a demo.

This resource is provided for general informational purposes only. It does not constitute professional legal advice and may not apply to your specific situation. Consult with professional legal counsel before making any decisions about your business.