Review Entries and Post the General Journal for Year End Closing

In this example, a G/L account with 2010 entries is reviewed before and after posting the journal for comparison. The steps of reviewing these entries are not part of the closing process.

Scenario

To complete the year end closing process, Sam posts the entries transferred to the Default General Journal.
Note: Because a retained earnings account was specified in the Close Income Statement batch job, a separate balancing line is not required. See previous Year End Closing Tips for instructions on specifying the retained earnings account.

Review G/L Entries in NAV

1. On the Navigation Pane, click Financial Management > General Ledger > Chart of Accounts.
2. Locate and select account 9110.
3. Make note of the amount in the Net Change field and then click the AssistButton.
4. Review the posted entries.
5. Close the General Ledger Entries and Chart of Accounts windows.

To post the general journal in NAV, follow these steps:

1. In the General Ledger folder, click General Journals.
2. Ensure that the DEFAULT batch is selected.
3. Do not change the Posting Date.
4. Press CTRL+END to go to the last entry, for account 3120, the Retained Earnings account. Make note of the amount.
5. Notice that the Total Balance field at the bottom of the window contains a zero balance. Therefore, the journal can be posted.
6. Click Posting > Post.
7. Click Yes to post the journal.
8. Click OK.
9. Close the General Journal.

Once posted, an entry is posted to each income statement account so that its balance becomes zero and the year’s result is transferred to the Retained Earnings account in the balance sheet.

To review the posted G/L accounts, follow these steps:

1. In the General Ledger folder, click Chart of Accounts.
2. Locate and select account 9110.
3. Notice that the Net Change field contains a zero balance.
4. Click the AssistButton.
5. Notice that an offsetting line appears for the amount noted when reviewing the account prior to posting the journal.
6. Close the General Ledger Entries window.
7. Locate and select account 3120.
8. In the Net Change field, click the AssistButton.
9. Notice that the amount for the Close Income Statement 2010 line matches the amount for this account from the general journal.
10. Close the General Ledger Entries and Chart of Accounts windows.

Note: The same steps are used in both Ceres and eFood as outlined above for MS Dynamics NAV.  The examples above use the Cronus International demo company.

To see more start with our prep article Year End Closing training tips for NAV, then check out Year End Closing Tips (part 2) and Year End Closing in NAV (part 3).  For more tips and training for NAV, check out our Webinar MS Dynamics Training Schedule.

Run the Close Income Statement

The second step in the year end close process is to run the Close Income Statement batch job to transfer the Income Statement account balances.

Scenario

After closing the 2010 fiscal year, Sam needs to run the Close Income Statement batch job to transfer the income statement accounts to account 3120, the retained earnings account, as part of the fiscal year processing.

• The default general journal is used and the posting description includes the fiscal year number.
• You need to retain the Area, Business Group, and Customer Group dimension information posted on the income account entries.

To run the Close Income Statement batch job, follow these steps:

1. On the Navigation Pane, click Financial Management > General Ledger > Periodic Activities > Fiscal Year > Close Income Statement.
2. Ensure that the Fiscal Year Ending date is 12/31/10.
3. In the Gen. Journal Template field, click the AssistButton and select GENERAL.
4. Click OK.
5. In the Gen. Journal Batch field, click the AssistButton and select DEFAULT.
6. Click OK.
7. In the Retained Earnings Acc. field, enter 3120 (for the retained earnings account.)
8. In the Posting Description field, add 2010 to the end of the text.
9. In the Diminsions field, click the AssistButton.
10. Click the Selected field for Area to insert a check mark.
11. Click the Selected field for Business Group to insert a check mark.
12. Click the Selected field for Customer Group to insert a check mark.
13. Click OK to close the Dimension Selection window.
14. Click OK to run the batch job.
15. Click OK to the message that the journal lines have been created.

The Close Income Statement batch job does the following:

• Transfers the income statement account balances to an account in the balance sheet.
• Creates lines in a journal.
• Closes the income statement accounts.
• The closing entries are transferred to the retained earnings account.

After a fiscal year is closed, G/L entries can still be posted to the closed year. Do you need to post an entry to a closed fiscal year? Read tomorrow’s NAV Training Tip for step-by-step instructions on how to post a G/L entry and update the year-end close process to include the new entries. View the first article Year End Close tips and part 2 of the Year End Close process. Check back Thursday for the last installment in the year end close articles. Want more information on year end close procedures? Visit our training page and find classes to help you get the most out of your MS Dynamics NAV system.

Note: The same steps are used in both Ceres and eFood as outlined above for MS Dynamics NAV. The examples above use the Cronus International demo company.

For more tips and training for NAV, check out our Webinar MS Dynamics Training Schedule.

Closing a Fiscal Year in NAV

The first step in the year end closing process is to close the fiscal year. This process manages the periods and dates for fiscal years.
Note: A fiscal year cannot be closed before a new one is created.

To close the accounting periods, follow these steps:

1. On the Navigation Pane, click Financial Management > General Ledger > Periodic Activities > Fiscal Year > Accounting Periods.


Open Accounting Period in NAV

2. Click Close Year. A message appears regarding the year to be closed. This year is suggested based on the earliest open year, and the corresponding check marks in the New Fiscal Year field.

Note: To close a non-standard year, place a check mark in the New Fiscal Year check box of the last period to be included in the year to be closed.

3. Click Yes to close the year.

After running the fiscal year closing process:

Closed Accounting Period in NAV

• The Closed and Date Locked fields of all periods in that fiscal year are updated with a check mark that cannot be removed.
• The period lengths of the closed periods cannot be changed.

After a fiscal year is closed, G/L entries can still be posted to the closed year. When posting in a closed year, entries are marked as prior-year entries. When subsequent entries are posted to a closed fiscal year:

• The Close Income Statement batch job must be run to transfer the balances to the retained earnings (equity) account.
• The transferred entries must be posted.

Note: To prevent users from posting entries in a specific period, set a date range in the Allow Posting From and Allow Posting To fields in the General Ledger Setup window.

Next steps. Running the Close Income Statement batch job to transfer the Income statement account balances. After the batch job is complete, the journal containing the transferred balances is posted. Check back Tuesday for details on the next step in the Year End Closing process in NAV.

Note: The same steps are used in both Ceres and eFood as outlined above for MS Dynamics NAV. The examples above use the Cronus International demo company.

For more tips and training for NAV, check out our Webinar MS Dynamics Training Schedule.

NAV Training Tips: Closing a Fiscal Year Part 1

Before you start the Year-End Closing you’ll want to know the answers to the following questions. This will help you prepare for your Year-End Closing steps.

Question: What are the three main steps of completing the year end closing process?

Answers:

• Post the general journal.
• Transfer the Income Statement account balances.
• Close the fiscal year.

Question: What occurs after the Close Year process is run?

Answers:

• Subsequent entries posted in the closed year are marked as prior-year entries.
• The Closed and Date Locked check boxes in the Accounting Periods window contain check marks that cannot be changed.
• Period lengths of closed periods cannot be changed.

Question: How Do I Post in a Closed Year?

Answer:

• The Close Income Statement batch job must be run and then the transferred entries must be posted.

Question: What happens during the Close Income Statement batch job?

Answers:

• Transfers the income statement account balances to an account in the balance sheet.
• Creates lines in a journal.
• Closes the income statement accounts.

Question: What type of account are closing entries transferred to?

Answer:

• Retained Earnings.

Question: What occurs when posting the journal containing the closing entries?

Answers:

• An entry is posted to each income statement account so that its balance becomes zero.
• The retained earnings accounts are updated for the gain or loss.

Question: In the closing process, what occurs when an additional reporting currency has been set up in the General Ledger Setup window?

Answer:

• The journal is automatically posted when the Close Income Statement batch job is run.

Question: What is used to transfer the income statement account balances to a balance sheet account?

Answer:

• Close Income Statement batch job.

Question: What must occur to prevent users from posting in a closed period?

Answer:

• Set a date range in the General Ledger Setup window.

Now that you know the answers to these basic Year-End Close questions you’re ready to start the steps. Check back Thursday to see the first steps in the Year-End Close process in MS Dynamics NAV. For more tips and training for NAV, check out our Webinar MS Dynamics Training Schedule.

Note: The same steps are used in both Ceres and eFood as outlined above for MS Dynamics NAV.