That SAP Business ByDesign Closing business scenario helps you perform period-end closing activities to ensure the accuracy of financial reports, such as the balance sheet, income statement, and cash flow statement. Other closing activities are carried out separately in the relevant areas. The system generates a list of closing activities. This process is based on the company’s individual scope of the solution and can be adjusted depending on the requirements for monthly or annual financial statements.

The accountant prepares for the close by making sure that all business transactions have been entered into the system. This includes, for example, entering and paying invoices or carrying out inventories.
The “Period-End Closing” work center view helps you comply with legal requirements and minimizes the risk of incorrect timing or missing important steps.
The accountant performs periodic evaluation tasks. This includes, among other things, asset depreciation and foreign currency valuation. He also assigns costs and revenues to the corresponding periods. This ensures punctual and legally compliant financial reports and analyzes.

The Monthly Closing business process helps you carry out the month-end closing activities to ensure the accuracy of the financial reports, such as the balance sheet, income statement, and cash flow statement. Period-end closing activities include closing business transactions and other postings to prepare for month-end closing, such as journal vouchers.
In the event that partner companies are involved, it is also necessary to enter cross-company entry vouchers.

Source: help.sap.com, as of March 2017