How to Close previous year accounts

Follow these simple steps to Close your Previous Year accounts.

The Close Year process will simply clear down the values on your Profit & Loss accounts to your Reserves account on your Balance Sheet, leaving your accounts ready to record the new year Profit and loss postings. All journals are created automatically for you with a simple 2 step sequence and the journals can all be reviewed again after. This process is final and therefore cannot be reversed.

Prerequisites:

All Posting Periods for the Previous Year are set to LOCKED to ensure no further postings are added. Check out the full article here on Closing Months before you continue.
Run the Profit & Loss Report for the Previous year if not already done
Define a new GL account called ‘Year End Closing Account’ and this must be stored in the Capital and Reserves drawer in your Chart of Accounts on the Balance Sheet. (If you are new to Enterpryze from May we will have already done this for you).

Example:

There are 2 Stages involved in the Close Year process:

First Stage: On the last day of the Previous Year a Journal will be added that will clear down the balances on all your Profit and Loss accounts for that year and will update that value into the new ‘Year End Closing Account’.

Second Stage: On the first day of your current year a journal will be added that will take the value from the ‘Year End Closing Account’ and will post it to the ‘Retained Earnings’ account.

At all times both journals will be automatically dated for you and an automatic Reference will be added. You will be able to review and see all journals posted once the Close Year process is complete.

Now you are ready to complete the Close Year:

Click on Settings > Finance & Banking > scroll down to the Closing Months
Against the Previous Year you will see the Close Year Note this will only appear for the Previous year.
Now click on Close Year (once you continue with this it is not reversible)
Now fill in the 2 required GL accounts from your Capital and Reserves. The Drop down list should contain the following accounts (account numbers may not be exactly the same):
- Click on Continue
  
  Closing Year First Stage:
  - You are now on Closing Year First Stage which is the first Journal entry. This contains a list of the Profit and Loss account values for the Previous Year. You can check these against your Profit and Loss report to ensure no further postings have occurred.
  - You will see that the dates on the journal are on the last day of the previous year which is correct. There is also a Reference automatically assigned for you confirming the Year being closed and that this is an automatic journal.
  - You will also see the last line of the journal will contain the total Profit and Loss value which will be transferred to the ‘Year End Closing Account’ for you.
  - When you are ready to continue click on SAVE to add the Journal.
  Closing Year Second Stage:
  - You are now on Closing Year Second Stage which is the second Journal entry. This contains the value from the ‘Year End Closing Account’ and the same value that will be posted to the ‘Retained Earnings’ account. So the value in the Year End Closing Account will be Zero coming forward.
    Example:
  - You will see that the dates on the journal are on the first day of the current year which is correct. There is also a Reference automatically assigned for you confirming the Year being closed and that this is an automatic journal.
  - When you are ready to continue click on SAVE to add the Journal.
  At any time you can review both Journals through the Accounting > Journals option or simply click on Open Journal entry in the Closing Months option as per below.