You run the year end routine to close your current financial year and move you into your new financial year. The year end process is made up of several tasks, including clearing balances and making some year end postings in your accounts. Read on to find out more about what the routine does.
Profit and loss balances clear
The balances up to the end of the current financial year, on your profit and loss nominal codes, are transferred, as a journal, to the Profit and Loss Account nominal code. This nominal code is 3200 by default, and is in the Capital and Reserves section of the chart of accounts.
Any balances remaining on the profit and loss nominal codes relate to transactions posted for the new financial year. The balance on the Profit and Loss Account nominal code is adjusted by the amount of profit or loss from the financial year you've closed.
NOTE: The Profit and Loss Account nominal code is a control account. The year end postings are automatically sent to this account. To check the control accounts click Settings then click Control Accounts and the Profit and Loss Control Account is called Retained Earnings.
Balance sheet balances
The balance sheet nominal code balances are carried forward into the new financial year. They're transferred to the brought forward boxes in the nominal records, and are included in the year to date (YTD) values on the Balance Sheet report when calculated for a date in the new financial year.
Audit trail postings
The journals posted to clear the balances from the profit and loss nominal codes are added to the audit trail. A report that lists these journals is created.
TIP: You can print the report, or export it to file and print later.
Nominal records update
In the nominal record Details tab, the value of any future dated transactions are transferred from the Future column, to the relevant month in the Actuals column.
The actual monthly balances for the financial year that you're closing are transferred to the prior year columns in the nominal record. You can then print comparison reports in the new financial year.
NOTE: You can choose to base your nominal or departmental budgets for the new year on your current year actuals or budgets, for your profit and loss nominal codes. These values are transferred, to the Budgets column, and if required, you can apply a percentage increase.
Product records update
The actual sales value and actual quantity sold values in each product record are transferred to the Prior Year columns. Any future dated transactions are transferred to the relevant monthly box in each product record.
In the Year End option, if you choose to base your stock budgets for the new year on your current year actuals or budgets, theses values are transferred to the Budgets column for your stock codes. If required, you can apply a percentage increase.
Customer and supplier records update
The values in the year to date (YTD) turnover box, in the sales or purchase tab, on all customer and supplier records are transferred to the Prior YTD box. Any future dated transactions are transferred to the relevant monthly box.
Financial year start date changes
Your financial year start date moves forward by one year. To check this click Settings and click Financial Year.
When you run a Year End on a company using funds, year end journals post for any transactions you've posted to a fund and a profit and loss nominal code.
The balance of these transactions posts to the fund nominal code set when you first set up the fund. The sum of this balance, previous year end balances and the original opening balance determines the opening balance for the fund at the beginning of the new financial year.
Watch a demonstration
Watch a recording of our live webinar and see how easy it is to run a year end in Sage 50cloud Accounts. Watch now >
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