Year-End

The Ideal

Ideally, the General Ledger for the old year should be fully closed before the new year begins and the subledgers are in lock-step with the General Ledger. Only one fiscal year is open at any time and the Status of Last Year is always Completed. At the end of the fiscal year you just Close the Old Year. In this case you never Open a New Year.

Overlapping Fiscal Years

In reality the books for the old year are often revised for several months after reporting for the new year must begin. To minimize adjustments in this period the General Ledger system opens the new year separately from the close of the old year. When the new year is opened the following actions are taken:

1. Closing balances are calculated for all accounts for the old year. Balance forward entries are created for the new year for assets and liability accounts. Incomes and expense balances are totalled into the balance forward entries for the respective clearing accounts.
2. The new year becomes the current year.

Year End adjusting transactions are assembled in batches in the same manner as regular transactions. Adjustments to the old year are normally posted to the closing period. Be careful to assign the adjustment batches to the correct year because the default is the current year. Reporting in the new year is not aware of these final adjustments to the old year during the closing time. When the old year is finally closed the following actions are taken:

1. Closing balances are recalculated for all accounts for the old year. These balances then replace the temporary values calculated during the opening.
2. All input to the old year is stopped.

If adjustments occurred during the closing, all period closing reports already produced for the new year should be reprinted. This approach eliminates the need for any adjustments to be made in the new year to account for closing activities in the old year.

A separate set of reports are available for analyzing the old year. These include:

1. Detail of Accounts
2. Basic Trial Balance
3. Comparative Trial Balance

Subledgers Active in Both Years

In this case some subledgers open for the new year before others and before the General Ledger is ready to open for the new year. The early subledgers need the Accounting Periods for the new year defined before the General Ledger is opened for the new year. In this case use the Update for Accounting Periods on the Yearend menu to create the accounting periods for the new year before the General Ledger for the new year is opened. These Accounting Periods will then be used when you Open the New Year later.

NOTES:

1. Closing a year when the previous year is not open effectively opens a new year before doing the close for the current year.
2. When subledgers run on different timetables from the General Ledger, the Accounting Periods may need to be defined for the coming fiscal year even before we are ready to open it. To create, or update, the Accounting Periods use the Update for Accounting Periods on the Yearend menu. These Accounting Periods will be used when you Open the New Year later.
3. Accounting Periods are created with a closed Status (I). A warning is given whenever a General Ledger transaction is about to be created for a closed period. The warnings can be avoided by opening the periods before any transactions are sent to them. More than one period can be open at any time. If need be, all the periods could be opened immediately at the beginning of the year.