Examples of changes that cause a prior year adjustment

• Deleting a transaction posted to a profit and loss code.
• Changing the value of a transaction posted to a profit and loss code.
• Changing the date of a transaction posted to a profit and loss code to a date in this, or a future, financial year.
• Changing a profit and loss nominal code to a balance sheet nominal code.
• Changing a balance sheet nominal code to a profit and loss nominal code.

Examples of changes that don't cause a prior year adjustment

• Changes to a balance sheet nominal code.
• Changing from one profit and loss nominal code to another.
• Changing the date from one date in the previous financial year to another date also in the previous financial year.
• Any non critical changes. For example, reference or details.

If your changes create a prior year adjustment on your balance sheet, there are 3 ways you can deal with this:

Option 1 - Leave the Previous year adjustment on the Balance Sheet and advise your accountant

If you're unsure how to proceed, leave the previous year adjustment on the balance sheet and seek advice from your accountant.

 

Option 2 - Move the brought forward P&L balances to the profit and loss account nominal code.

You can move the values from the relevant profit and loss nominal codes to the profit and loss account nominal code, by default 3200. This is the code where the values would have gone if you'd made the adjustment before you ran the year end.

TIP: You can check your profit and loss account nominal code in Settings > Control Accounts > Retained Earnings.

However, these values will not have been accounted for on the final end of year profit and loss or trial balance report for the previous year.

If the following brought forward value appears on the trial balance:

N/C	Debit	Credit
4001 - Sales Type B		4500.00

Post the following journal dated the last day of the previous financial year:

N/C	T/C	Debit	Credit
4001 - Sales Type B	T9	4500.00
3200 - Profit and Loss Account	T9		4500.00