Close a fiscal year
Completing the year-end closing process involves three steps:
Closing the fiscal year by using the Close Year function on the Accounting Periods page.
Generating a year-end closing entry by using the Close Income Statement batch job.
Posting the year-end closing entry together with the offsetting equity account entries.
Closing a fiscal year
The first step in the year-end closing process is to close the fiscal year. This process manages the periods and dates for fiscal years.
Select the Search for Page icon in the top-right corner of the page, enter accounting periods, and then select the related link.
Select the Home action and then the Close Year action.
You'll receive a message about the year that is to be closed. This year is suggested based on the earliest open year and the corresponding check marks in the New Fiscal Year field.
After the batch job has run, the following parameters will apply:
The Closed and Date Locked fields for all periods in that fiscal year are selected and they can no longer be cleared.
The Date Locked field for the first period of the next fiscal year is selected and it can no longer be cleared.
The period lengths for the closed periods cannot be changed.
It isn't possible to reopen a closed fiscal year. You must always have at least one open fiscal year. When closing a year, ensure that a new year has been created.
Though a fiscal year is closed, you can still post general ledger entries to it. When you do, the entries are shown as posted to a closed fiscal year and the Prior-Year Entry check box is selected. By default, the check box isn't displayed on the page.
Close the income statement
The second step is closing the income statement. The Close Income Statement batch job transfers the income statement account balances to an account in the balance sheet and it closes the income statement accounts. The Close Income Statement batch job also creates lines in a journal that are posted manually. You can use the Close Income Statement batch job multiple times to transfer the income statement account balances. For example, you might have to transfer balances when the next entries are posted into a closed year.
If you want to close the income statement, follow these steps:
Select the Search for Page icon in the top-right corner of the page, enter close income statement, and then select the related link.
On the Close Income Statement page, fill in the following fields:
Fiscal Year Ending Date - This field is automatically populated with the last date in the latest closed fiscal year. This date is used to determine the posting date of the journal.
Gen. Journal Template - Identifies the name of the general journal template that the entries are added in.
Gen. Journal Batch - Identifies the name of the general journal batch that the entries will be added in.
Document No. - This field is automatically populated with the next available number from the number series for the selected Gen. Journal Batch.
Retained Earnings Acc. - Identifies the account that the retained earnings entries are added in.
Post to Retained Earnings Acc. - Specifies if the resulting entries are posted with the Retained Earnings account as a balancing account on each line (Details) or if retained earnings are posted as an extra line with a summarized amount (Balance).
Posting Description - Specifies the text to accompany the entries. The default text is Close Income Statement.
Close by - Provides the available accounting options to classify into multiple entries. If neither option is used, a single entry is created for each account. The options in this field are:
Business Unit Code - If this field is selected, and the company is a consolidated company, separate entries are created for each business unit.
Dimensions - For any dimensions that are selected, one entry is posted for each dimension value combination that is used in a G/L account.
If you have set up mandatory default dimensions on any of the income statement accounts, and you didn't select the mandatory dimension, you'll get a warning.
Inventory Period Closed - Indicates that the inventory period(s) with ending dates equal to or greater than the last date of the accounting period is closed.
Post the journal
The Close Income Statement batch job transfers the closing entries to the specified journal batch. You will have to manually post the entries. Only when an additional reporting currency is set up in the General Ledger Setup page will the journal be posted automatically. This method helps guarantee the correct posting of rounding differences.
If an account is not specified in the Retained Earnings Acc. field in the Close Income Statement batch job, one or more lines must be inserted into the journal with the retained earnings account and the amount that will be posted to the account.
The posting date on the journal lines that is used is the Fiscal Year Ending Date, as used in the Close Income Statement batch job, and is automatically preceded by C. This indication shows the entries as closing entries and can be used as a filter for reporting purposes. For example, on the G/L Balance page, you can choose to include or exclude closing entries.
When the journal is posted, one or more entries are posted to each income statement account so that its balance becomes zero. Also, the retained earnings account is updated for the gain or loss.
Watch this demonstration of how to close a fiscal year.