Create fiscal calendars, years and periods
There are many reasons why a legal entity might need different fiscal calendars. For example, fixed assets might require two calendars, one for auditing purposes and another for tax purposes.
Having multiple calendars lets you run parallel depreciations for the fixed assets and reduces the amount of setup required for each legal entity because you can use the same fiscal calendar for multiple legal entities.
This unit explains how to create fiscal calendars in Finance.
The periods and fiscal year features are very useful for the preparation and reconciliation of periodic and yearly accounts.
Finance posts transactions according to dates, instead of periods. Accounting periods are used for reporting. The closing of accounting periods allows you to close the sub-ledger to make sure that no additional transactions are recorded.
Both fiscal years and periods can be set up with the following measurements of time:
- Years
- Months
- Days
Each period (at the ledger level) can be:
- Closed completely or put on hold to block transaction postings.
- Set to enable selected users to continue an update of one or more modules.
You can create and delete fiscal calendars, fiscal years, and periods on the Fiscal calendars page in General ledger > Calendars > Fiscal calendars.
Watch this video to learn how to create a fiscal calendar in Finance.
You can also divide existing periods and create closing periods that can be used to close a fiscal year.
There will always be an Open and Closing period created along with the number parameters specified in the Length of period and the Unit fields. There can be multiple closing periods, but there is only one opening period.
A closing period is used to separate general ledger transactions that are generated when a fiscal year is closed. When the closing transactions are in one fiscal period, it is easier to create financial statements that either include or exclude different types of closing entries. If a fiscal year is divided into 12 fiscal periods, the closing period is usually the 13th period. However, a closing period can be created from any period that has a status of Open.
When you create a closing period, select a period that has a status of Open and that has the dates that you want to use. The new closing period will copy the starting and ending dates from the existing period. The original period will continue to exist.
For example, you select Period 12, which is the last period in the fiscal year, and that has dates of August 1 through August 31. You enter a name for the closing period, such as Close. After you create the new closing period, you now have the original period and the closing period. Both have dates that start on August 1 and end on August 31.