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Tres Year-End Routine

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Tres Year-End Routine

  • Updated

Overview

Generally Accepted Accounting Principles (GAAP) recommend closing out all Income Statement General Ledger (GL) accounts to zero through a Fiscal Year-End Journal Entry. Tres automates this process with the Year-End Journal Entry routine, which can be accessed via Settings > GL Setup > GL Year-End Routine.

Timing of the Year-End Journal Entry

  • The Year-End Journal Entry should be dated as the last day of the agency's fiscal year.
    Example: For a fiscal year ending December 31, 2024, the Year-End Journal Entry should be dated 12/31/24.
  • Ensure all fiscal year entries, including adjustments, are completed before performing the Year-End Journal Entry.
  • There is no time limit for entering the Year-End Journal Entry. For instance, the entry for 12/31/24 could be posted on 4/15/25.

How the Tres Year-End Routine Works

  • The routine reviews balances in each Income Statement GL account (e.g., Sales, Cost of Sales, Expenses) and creates a journal entry to offset those balances to zero.
    Example:
    • Sales (Credit balance: $1,000) → Debit $1,000
    • Rent Expense (Debit balance: $500) → Credit $500
  • The remaining balance is journalized to the Retained Earnings account.

Impact on Financial Reports

  • Income Statement:
    Year-End Journal Entries do not impact the Income Statement. An Income Statement for 1/1/24–12/31/24 will remain unchanged, regardless of whether the Year-End entry is dated 12/31/24.
  • Balance Sheet:
    • The Year-End Journal Entry will not affect the Balance Sheet as of its date (e.g., 12/31/24).
    • It will be reflected in Balance Sheet totals starting the day after the entry date (e.g., 1/1/25 onward).
  • Account History Reports:
    • Year-End Journal Entries will not appear on reports ending on the entry date (e.g., 12/31/24).
    • They will not appear on reports starting on the entry date.
    • They will appear on reports where the entry date falls within the reporting period.

Reversing a Year-End Journal Entry

In rare cases, a Year-End Journal Entry may need to be reversed. Tres allows this through a reversal process that creates a negating journal entry.

  • Both the original and reversing entries will be treated as normal journal entries.
  • They will appear in the Account History report.

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