Frequently Asked Questions
How to do a year end/close a year
Last updated 2 years ago
How to Close a YearThis selection is run at the end of your accounting year as part of the closing procedure. It consists of two functions:
(1)Print closing report - This function is used to print the Year End Closing Report, which shows the net profit (loss) entries that will be made by Post closing entries when it is run. This report may be printed to verify the net profit for the year prior to closing G/L so that any final corrections can be made.
(2)Archive G/L data - This function takes the G/L data for the closing year and stores it under a new company ID. This allows you to refer back to the transaction detail for a prior year at any point in time.
(3)Post closing entries - This function is used to close the year. It performs the actions needed to close the fiscal year. These actions are described in detail later in this chapter.
If You Are Not Ready to Close the YearIt often occurs that you must start your new fiscal year before the old fiscal year is closed. This occurs, for example, if your fiscal year ends on June 30th of the year, but the final adjusting entries for the fiscal year are not made available to you until August. In this case, you must start your new fiscal year before closing the previous year.
If you are not ready to close your General Ledger at fiscal year end, you can take the following steps so that you can process information for the new year:
(1)Change the accounting periods to reflect the new year.
Make entries as usual. The Trial Balance will include a beginning balance for your P&L accounts from last year until you close.
(2)When you are ready to close, change the accounting periods back to last year. Make sure that the last day defined here isthe last day of the year you intend to close.
(3)Perform the End of Fiscal Year checklist in the chapter titled Guide to Daily Operations.
Do not make a journal entry for “retained earnings”. The software will do this automatically.
5)Run Print closing report (if needed) followed by Post closing entries.
Actions performed by Post closing entriesThe following is a list of the actions performed by Post closing entries:
a.It automatically adds one year to all accounting period dates in the Accounting Period File, and sets the current period and the reporting period to the first new accounting period. You can then manually change the accounting periods, current period, and reporting period if you wish.
b.It sets the “comparative amounts” in the Chart of Accounts File for each G/L account. After Post closing entries is run, the comparatives for an account will contain the balances for that account for each period of the fiscal year just closed. When comparative financial statements are run in the new year, you will then be able to compare new year balances against comparatives from the fiscal year just closed. The “comparative amounts” stored by Post closing entries are called the “new comparatives” throughout this chapter. They are the new comparatives which are set up for use in the new fiscal year, although their amounts correspond to the account balances from the prior year.
c.It allows you to set budgets for G/L accounts in the Chart of Accounts File for the new year. The budgets may either be left as they are currently, set to zero, or set in relation to the “new comparatives”, as described above.
d.It clears all entries from the General Ledger Transaction File for the year being closed. Entries already made for the new year are left unchanged.
e.It creates balance forward entries for all balance sheet accounts. The date for these entries is the last day of the fiscal year being closed.
f.It moves the amounts for each period to the prior-year comparative fields in the Chart of Accounts File.
g.It automatically posts the net profit (loss) to the retained earnings account entered in Control information.
h.It prints the Year End Closing Register. As mentioned at the beginning of this chapter, you may print the Year End Closing Report prior to running Post closing entries in order to see the information that will be printed on the Year End Closing Register when Post closing entries is actually run.
Before You BeginWe recommend that before you select this function, you do this:
a.Print all closing financial statements, including a detailed year-end Trial Balance.
b.Make backup copies of all G/L data files if you do not use the Archive G/L data function. Off-site backups is always a good idea regardless of any other precautions.
You will then have a permanent record of the activity for the fiscal year.
To BeginSelect End of year -> Print closing report from page 2 of the G/L menu.
You will not be able to continue if:
Any entries exist in the General Journal Transaction File (which means they have not yet been posted to the General Ledger Transaction File), or
Another user is using General journal.
If today’s date is during the fiscal year being closed, you will see a warning message.
Print Closing ReportThis selection will print the Year End Closing Report, which shows what net profit (loss) entries Post closing entries will make. Print closing report does not perform any other function except showing what will occur when Post closing entries is run.
The report is printed in two sections. The first section is titled “Closing Entries” and will show all P&L accounts with the amount totals to be posted. The second section is titled “Retained Earnings Entries” and shows the profit (loss) amount to be posted.
Archive G/L DataThis selection creates a new company ID, and copies the G/L data files and any common company data files (company file etc.) to this new company ID. The purpose of which is to allow users to inquire into prior year financial data in detail without disturbing current financial data.
Select End of year -> Archive G/L data from page 2 of the G/L main menu. On the next screen, enter a new company ID and a name for the new company. After a period of processing you will be returned to the G/L main menu.
To report and view last years data, simply go into new company ID the next time you start up your Samco Power Accounting, or select Change company number from page 2 of the G/L main menu.
Post Closing EntriesSelect End of year -> Post closing entries from page 2 of the G/L main menu. After a screen which describes the End of Year functions, another screen appears.
From this screen you can confirm or change your new accounting periods. If you wish to change the accounting periods, use the same procedures described in the Accounting Periods chapter.
The purpose of the next screen is to allow you to set new-year budgets for each of your G/L accounts in the Chart of Accounts File. You may select one of three different methods for handling the new-year budgets:
(1)Leave budgets as they are.
In this case, the budgets for the new year will be the same as they were for the fiscal year being closed.
(2)Set budgets to zero. In this case, all budgets will be set to zero.
(3)Set budgets to new comparatives.
After Post closing entries is run, the comparatives for an account will contain the balances for that account for each period of the fiscal year just closed. When comparative financial statements are run in the new year, you will then be able to compare new year balances against comparatives from the fiscal year just closed. The “comparative amounts” stored by Post closing entries are called the “new comparatives”. They are the new comparatives which are set up for use in the new fiscal year, although their amounts correspond to the account balances from the prior year.
If you select to set your budgets based upon the “new comparatives”, you are basing your new year budgets on performance in the prior fiscal year. If you choose “Set budgets to new comparatives”, you see a screen requesting you to enter the following:
1.Change byThis field determines how you want to change the new comparative amounts to produce the budget amounts.
You may either:
(1)Use the new comparative amounts as they are, or
(2)Increase or decrease the comparative amounts by a specific dollar amount, or
(3)Increase or decrease the comparative amounts by a percentage.
AChange by Amount
PChange by Percent
2.Amount of changeIf you selected “No change” in field 1, this field is skipped.
Change by amountIf you selected “Change by amount”, the budget amounts will be the comparative amounts plus the dollar amount you enter here.
The dollar amount may be positive for an increase, or negative for a decrease.
Change by percentIf you selected “Change by percent”, the budget amount will be the comparative amount, increased by the percentage you enter here.
The percentage can be positive or negative. ProcessingOnce you have described the handling for the new-year budgets, year end processing begins. The first step is to print the Year End Closing Register. During processing, a screen appears showing the account number being processed.
The following are the results of running Post closing entries:
a.The Accounting Period File has been updated for the new year. (You may need to update the current period and reporting period at this point, by using Accounting periods, if there were delays in closing your fiscal year.)
b.The comparative amounts for each account in the Chart of Accounts have been updated to be the ending balances for the periods of the fiscal year just closed.
c.Budgets for each G/L account have been set for the new year. Budgets are set according to your wishes, as entered during Post closing entries.
d.All entries from the fiscal year just closed have been
cleared from the General Ledger Transaction File.
(Entries already made for the new year are left unchanged.)
e.Balance forward entries for all balance sheet accounts have been created. The date for these entries is the last day of the fiscal year just closed.
f.A net profit (loss) entry has been made to the retained earnings account entered in Control information. If “(Varies by sub-account)” was entered for the retained earnings account, then individual entries have been made for each of the sub-accounts of the retained earnings account.