Fiscal years and closing
Close a fiscal year, and reopen it if needed
At year-end, move the year's revenue and expense balances into the prior-years profit account and lock the year. If a late correction is needed, reopen the year and close it again.
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In this article
Closing a fiscal year does two things. It resets the year's income statement accounts to zero by moving their balances into equity, and it locks the year so that nothing more is posted into it. The new year then starts with clean revenue and expense accounts, while your assets, liabilities and equity carry on.
Before you start
Check the year. Review the trial balance and the profit and loss for the whole year. Post your accruals, depreciation and other adjustments first.
Clear the pending entries. The close is refused while the year still contains manual entries or transfers waiting for approval. Approve or reject them in Transfer restrictions.
Add the next year. Add the next fiscal year for the branch, so that postings continue after the close. See Set up fiscal years.
The year must be active. An inactive year cannot be closed.
You need the permission to close fiscal years.
Close the year
Open Accounting › Fiscal Years.
Find the year and the branch. Open the row's actions menu and select Close. The option is unavailable when the year is already closed or not active.
Read the confirmation in Close fiscal year and confirm.
The message Fiscal year closed. confirms it. Each branch's year is closed on its own, so repeat the steps for every branch.
What the close posts
For every level-5 revenue and expense account of the branch, the system takes the account's net movement for the year, from 1 January to 31 December.
It posts the opposite amount to bring that movement to zero, against the branch's prior-years profit account (the account with code 2103010002 in the standard chart).
All these lines form one closing entry, dated 31 December of the closed year.
As a result the profit or loss of the year lands in equity, and the balance sheet stays in balance. The year is then marked closed, with the Close date and Closed by, and it no longer accepts postings. Open the year's page to see the Closing entry with its Entry no., the number of Legs and the totals.
Reopen a closed year
Sometimes a correction arrives after the close. A user with the reopen permission can open the year again:
On Accounting › Fiscal Years, open the closed year's actions menu and select Reopen.
Confirm in Reopen fiscal year.
The system reverses the closing entry with a mirror entry dated 31 December and makes the year active again. Post your correction, then close the year again so that the closing entry reflects the corrected figures.
You cannot reopen a year while a later year of the same branch is still closed. Reopen the later year first.
Common questions
Do I need an opening entry for the new year? No. Asset, liability and equity accounts keep their balances from one year to the next. Only revenue and expense accounts are reset by the close.
The close was refused because of pending entries, but I cannot find them. Pending entries are those dated in the year being closed. Open Accounting › Transactions › Transactions, set Status to Pending and the dates to that year.
Can I still delete a closed year? No. Reopen it first.