Task guide
Closing the financial year
Close a financial year by moving its profit into retained earnings with one journal, see what stops it closing, reopen it by reversing the journal, and download the auditor pack.
What the year-end close does
Ledger, Year end closes a financial year's profit and loss. One journal, dated on the year's last day, moves every income and expense account's balance for the year into retained earnings, account 3100. The next year then starts its profit and loss at nought, and the balance sheet carries what was earned.
Choose the Financial year at the top of the tab. The card for that year shows:
- Period: the first and last day of the year, which follow the firm's financial year start (see Set up your firm).
- Income, Expenses and Profit for the year.
- Standing: Ready to close, a list of what stops it, or Closed by journal with the journal's number, which opens.
Close the year
- Close each month of the year but the last, in order (see The ledger and accounting months). The last month stays open, because it takes the closing journal and then closes like any other month.
- Open Ledger, Year end and choose the year. Standing must read Ready to close; if it lists a month still open, or a last month that is already closed or locked, deal with that first. A last month that is closed must be reopened to take the journal.
- Choose Close the year and confirm. The confirmation says the profit moves into retained earnings by one journal on the year's last day.
You need the right to close accounting months. A year in which nothing was earned or spent has nothing to close, and the system says so. If two people close at once, the second finds the first's journal.
The journal posts a debit or credit to each income and expense account to bring it to nought, and the difference to Retained earnings as Profit for the year or Loss for the year.
Reopen a year
A closed year is reopened only by reversing its closing journal, from the journal's own page (see Manual journals). Once it is reversed, the year can be closed again.
The auditor pack
Download the auditor pack gives the accountant or auditor one zip of the year's trial balance, general ledger, statements and reconciliations. It is shown to those who may export the journals. You are asked to confirm, and the download is recorded.
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Read next
- The ledger and accounting monthsThe rules the books keep that nobody can bypass, and how months are closed, locked and reopened.
- The trial balance and account ledgersRead the trial balance at any date, follow any balance down to its postings and source, and export the journals for the firm's accountant.
- Statements, layouts and budgetsDraw the profit and loss and the balance sheet on a layout the firm edits, slice them by office, department, practice area or partner, and hold the books against an approved budget.