Year End Procedures
Purpose
At the end of every fiscal year you should always close the books. When you allow Integral Accounting to do this, your accounts will be balanced, records verified, open transactions propagated into the next year, and your general ledger cleaned up. The procedure is very simple just click two buttons.
Before you perform a year end closing, you should first close out the last period of that year, as explained in Assistants -- Month End. When you have closed the month, you are ready to begin the Year End Closing.
Usage
1. Age receivables and payables
At the end of the year you will usually have open accounts. That is, your customers will still owe you for products and / or services rendered, and you may owe your vendors for similar things. In order for these to be carried over into the coming year, Integral Accounting must age the receivables and payables. Receivables are monies you expect to be paid to you. Payables are amounts that you owe to someone else.
The aging process is somewhat complex, but Integral Accounting takes care of all the details for you. All you have to do is click the button next to the option Age Receivables and Payables. Integral Accounting will take a few moments to process all your invoices, purchase orders, receivings, etc., and then inform you that the aging is completed. You will be returned to the form for the assistant, and the Age Receivables and Payables option will have a check mark next to it. This indicates that this step is complete. You can now go on the next step, GL Processing.
2. Do GL Processing
Integral Accounting maintains information for each financial period in your chart of accounts. This information must be moved around and transferred between different parts of the Integral Accounting accounting system whenever the fiscal year ends. To readjust this information, you must tell Integral Accounting to process the General Ledger (GL).
This, again, is a simple operation. Simply click the button next to the GL Processing option. You will then be shown another form.
This form is used to indicate where your profits will go. Net profit is called retained earnings. You must tell Integral Accounting the account into which your retained earnings will be placed. This will be one of the accounts from your Chart of Accounts.
Usually there should be an account in your chart of accounts that is specifically for retained earnings. You can, however, put the earnings in any account you wish. You may even need to create an account for this purpose.
Either type the number of the account or select it from the drop down list. Then click the OK button. Integral Accounting will churn for a few moments, and then it will send a Retained Earnings Transaction report to your printer. This report explains the whys and wherefores of all the profit transactions, and gives you an overall picture of how your business performed during the fiscal year.
After Integral Accounting has printed the report, it will clean up a few more items, and then inform you that Year End Processing is complete. Click the Done button on the Assistant form, and you will be ready to resume your next year of business. May the coming year be a profitable one!