Closing the Year for General Ledger
You perform the Year End Closing function at the end of the company's fiscal year, but it can be performed at anytime by specifying the fiscal start and end date without regard to the defined accounting periods. The fiscal year and subsequent periods are defined and closed on the Accounting Periods form.
Before running this function, verify that all outstanding journal transactions for the fiscal year are entered and posted to the ledger. This function generates journal transactions which set all revenue and expense account balances to zero. If all journal transactions are not posted to the ledger, the transactions created may not actually set all revenue and expense account balances to zero.
Only one user at a time can have the ledger open. Therefore, if someone is running a financial report or performing year end closing, this function cannot be performed until the original process is complete.
- 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:
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.