Year-End closing is performed once at the end of the fiscal year. The purpose for the year end process is to create a journal entry that zeros out all Sales, Cost of Sales, and Expense accounts, and rolls over the profit or loss into the Retained Earnings account. This ensures the income statement accounts are reset for the new fiscal year. The Retained Earnings account is designated in Settings > General Ledger Setup and this should have been selected as part of the General Ledger Set Up process. Learn more about General Ledger Setup here.
Prior to performing the year end process users should have reviewed and reconciled each month. At the end of the fiscal year once your last month has been reconciled, then the Accounting Lock Date should reflect the last day of the year and you are ready for the Year End Close. Learn more about Accounting Lock Date here.
Note: Only a user with Admin permissions can perform a General Ledger Year End Close.
Generating a Year-end Closing
1. Go to Settings > General Ledger Setup and select General Ledger Year End Close
2. Confirm the Year Ending Date and add a description in Remarks and click Generate Year End Close:
Note: If you receive a message “Year Ending Date must be on or prior to Accounting Lock” go back to Settings > Accounting Lock Date and make sure your Latest Lock Date is your fiscal year end date then retrace steps 1 and 2.
3. Once the Generate Year Ending Date button is clicked the year end journal entry is generated, displayed and saved. A confirmation message will be displayed.
Viewing the Year Ending Journal Entry
The Journal Entry that is created is a Journal Entry Type of “Year End”. Go to the Journal Entry Search screen. Select type of “Year End” and click search to display all available Year End Journal entries. Click the desired row to open and view the journal entry.
Reversing A Year End Journal Entry
If a change is required by your accountant or any for other reason you will have to reverse the Year End journal entry and change the Accounting Lock Date.
Follow the steps above to search and view a Year End Journal Entry. Once you find and open the desired journal entry, scroll to the bottom of the screen and click the “Reverse Year End Close” button. Confirm the prompt to reverse.
Your original Year End Entry is changed from “Year End” to a “Standard” type journal entry and a second journal entry is created, with all the debits and credits reversed to return the balances to all the income statement accounts. Reminder: You will need to change the Accounting Lock Date back to a previous date to allow changes to the time period you need. Once the changes are complete you will need to repeat the steps above for Year End.