Caution: This procedure creates debit and credit entries to
close out all revenue and expense accounts for the date range specified. These
entries are placed in the General Journal. You must then post the General
Journal to the General Ledger.
Note:
- This procedure should be run only after all entries made to the
fiscal year are posted.
- To close the journal, it must be a writable journal.
To close the year for the General Ledger:
-
On the
Year End Closing Journal Entries form, select
the general journal to close.
-
In the
Income Summary Account
field, select the "Retained Earnings" account for the year end closing
transaction. The account's type must be set up in the Chart of Accounts as
Owner's Equity.
-
(Optional) Change the
Fiscal Year Start Date and
Fiscal Year End Date.
-
To have the system first delete all journal entries for this
journal before generating the year-end transactions, select the
Delete Current Journal
Entries check box.
This refers to the existing entries in the General Journal only.
Do not change any of the references generated by the system on the entries in
the General Journal. If this check box is selected, all journal transactions
along with any associated text are deleted when the transactions are generated,
prior to creating the closing transactions.
-
To have the system clear the unit code balances in the revenue and
expense accounts as well, select the
Unit Code Detail check
box.
Clearing this check box leaves the balances in the unit codes, and
carries them forward.
-
Click
Process.
Note: You can close fiscal years an unlimited number of times. If you
have closed the fiscal year and need to enter transactions for that year, you
can post the transactions and then run the year-end close again.
Suppose the following entries were the financial activity for a
company for the fiscal year of January 1 to December 31 using the following
accounts:
| Account
|
Description
|
| 10000
|
Assets
|
| 20000
|
Liabilities
|
| 30000
|
Owner's equity
|
| 40000
|
Revenue
|
| 50000
|
Expense
|
Example of Ending Balances on December 31:
| Account
|
Balance
|
| 10000
|
100,000.00
|
| 20000
|
(64,500.00)
|
| 30000
|
(20,000.00)
|
| 40000
|
(23,500.00)
|
| 50000
|
8,000.00
|
Example of Year End Entries:
| Account
|
Balance
|
| 30000
|
15,500.00
|
| 40000
|
23,500.00
|
| 50000
|
(8,000.00)
|
Example of Ending Balance on December 31 after Year End Balance:
| Account
|
Balance
|
| 10000
|
100,000.00
|
| 20000
|
(64,500.00)
|
| 30000
|
(35,500.00)
|
| 40000
|
00
|
| 50000
|
00
|
No entries were generated for Accounts Receivable of Cash, because
they are asset accounts. Only revenue and expense accounts are closed out.