This is the final guide within the series of step-by-step recommended best practices for the year-end closing routine within Microsoft Dynamic GP. If you haven’t already, we recommend you read our four previous blogs on inventory, receivables management, payables management, and fixed assets before starting this last step in the chain.
Step one: Post the Final Adjusting Entries in General Ledger
In closing out the year, correct any errors made when transactions were processed using adjusting entries. If you must make any adjusting entries to allocate revenue, expenses, or depreciation to the year that you are closing, use the Transaction Entry window or the Quick Journal Entry window to make adjusting entries in General Ledger.
If you must track initially adjusting entries or post audit entries separately from other fiscal periods, auditing periods can be set up in GL.
Step two: Print an Account List to Verify the Posting Type of Each Account
To determine whether the account is closed to the retained earnings account or brought forward to the next fiscal year, print an account list in the Reports menu. For accounts being brought forth to the coming year, the posting type will be set to Balance Sheet and those being closed will be set to Profit and Loss in the Account Maintenance window.
Step three: Close the Last Period of the Fiscal Year (Optional)
To prevent transactions from being posted to the wrong period or year, it is recommended but optional to use the Fiscal Periods Setup to close out all fiscal periods that are still open.
Step four: Perform File Maintenance on the Financial Series Group of Modules (Optional)
Another optional step, this is completed by running the check links procedure on the Financial series group of modules.
Step five: Verify the Settings in the General Ledger Setup Window
There are reasons you want to keep historical records, and if you choose to do so, you need to make sure the “accounts” and “transactions” checkboxes are checked in the “maintain history” area of the GL Setup window.
If these boxes are checked, you will have the option in the future to print financial statements and calculated budgets from historical information, as well as view transaction details. Further, if these checkboxes are selected, both the account history and the transaction history are updated during the year-end closing routine.
Step six: Make a Backup
See previous blogs to understand how this is done.
Step seven: Print a Final Detailed Trial Balance Report
Before finalising the close, print a final year-end Detailed Trial Balance report. It is recommended you post all transactions for all modules before printing this report.
Step eight: Print the Year-End Financial Statements
Another important step to maintain your records, please print any necessary financial statements. The most common financial statements to be printed are Balance Sheet, Profit and Loss Statement, Statement of Cash Flows, and Statement of Retained Earnings.
Step nine: Set Up a New Fiscal Year
In the final step before closing the current year, you need to set up a new fiscal year. This is completed in the Fiscal Periods Setup Window.
Step ten: Close the Fiscal Year
- When the year-end closing routine is complete, the Year-End Closing report is printed. This report lists the accounts that were closed and the transactions that were created to close those accounts. The Year-End Closing report is part of the audit trail. Save this report for the company’s permanent records. The Year-End Closing report cannot be reprinted.
- The year-end closing routine removes accounts that are marked as inactive if the accounts match the criteria for deleting a posting account. Inactive accounts that have been set up as budget accounts can also be deleted if they have no activity for the year. These accounts can be deleted even if budget amounts from past years are associated with these accounts.
- The year-end closing routine moves all profit and loss account balances to the retained earnings account.
- This routine summarises balance sheet accounts and brings the balances forward as the beginning balances of the account in the new fiscal year.
- Lastly the closing routine prints the Year-End Closing report.
Step eleven: Close All the Fiscal Periods for All the Series (Optional)
Following the close, you may use the Fiscal Periods Setup window to mark the periods for all series as closed.
Step twelve: Adjust the Budget Figures for the New Year, and Then Print the Financial Statements
With the year closed, you now may adjust budget figures for the new year.
Step thirteen: Make a Backup
Now you have completed all the guides within the process of year-end close in Microsoft Dynamics GP. If you are looking for further assistance don’t hesitate to get in touch so we can help.
Read the three previous steps below..
Adam Carey & Mansoor Ahmed