Many organizations follow specific procedures to generate special journal entries to close and open fiscal years. These closing entries apply to both the income statement and balance sheet. Auditable closing procedures vary considerably, depending on country reporting requirements, generally accepted accounting practices in a country, and organization business needs.
General Ledger is equipped to create actual closing journals for year-end and other closing periods. If your organization has multiple legal entities, you can create closing journals for multiple ledgers simultaneously with ledger sets. You also have added security through data access sets because you can only run the closing journals programs against ledgers you have full read and write access to through your data access set. To process year-end closing journals, we recommend you:
Set up the last day of your fiscal year as an adjusting period.
Set up the first day of your new fiscal year as an adjusting period.
Ensure the period you are closing is an Open period.
Complete your routine accounting before the last day of the year.
Post your adjustments and closing entries in the adjusting period.
Define your ledger set if you plan to submit the closing journals programs for multiple ledgers simultaneously.
In the last adjusting period of the fiscal year you want to close:
Run the Create Income Statement Closing Journals process to transfer income statement year-end account balances of your revenue and expense accounts to the retained earnings account.
Run the Create Balance Sheet Closing Journals process to close and zero out the year-to-date balances of all balance sheet accounts: assets, liabilities, and owner's equity.
In the first adjusting period of your new fiscal year:
Run the Open Period program to open the first period of the new year.
Reverse and post the balance sheet closing journals to reopen those balances.
Note: You are closing actual journals. You cannot close budget or encumbrance balances.
The Data Access Set assigned to your responsibility controls whether or not you can run the closing journals programs against a ledger.
Full Ledger Access: You must have Read and Write access to the ledger and all of its balancing segment values or management segment values in order to run the closing journals programs for a ledger.
To obtain full ledger access, your data access set must be one of the following types:
The Full Ledger data access set type that provides read and write access to the ledger.
The Balancing Segment Value data access set type that provides read and write access to all balancing segment values for a ledger using the All Values checkbox.
The Management Segment Value data access set type that provides read and write access to all management segment values for a ledger using the All Values checkbox.
Partial Access:If you have Read Only access to a ledger or read and write access to some of its balancing segment values and management segment values, you will not be able to run the closing journals programs against a ledger.
If you use reporting currencies (journal or subledger level), be sure to include the proper access to your reporting currencies in your data access set to be able to run the closing journals programs.