Closing a Financial Period

A fiscal year (or financial year) corresponds to twelve months for a company. In many countries, the fiscal year corresponds to a calendar year. That may not be the case in other countries.

The financial year can be divided into monthly or three-monthly accounting periods (when you have a quarterly declaration).

Closing a Financial period

To close a financial period, Goto   Accounting>> Period Closing>>Create New

In the Period Closing form>> Period closing settings, the details of the financial period closing can be set up.

Closing Date is the date of closing the financial period.  Usually, it can be 31-Dec

Lock Accounts is set to 'Yes' when you want to lock all the users from entering/ editing any transaction done on or before the 'closing date'.

Note: There could be users/roles assigned so that only those users are allowed to enter/edit transactions. This can be done from Accounting>>Account Lock>>Open the particular entry >> Assign role or user

Reset Income/Expense Accounts is set to 'Yes' when the Income And expense accounts have to be set to zero for the next accounting period.

Once the transaction is created, on the closing date, the financial period would be closed.

When the financial period is closed, the following actions take place

1. A Journal entry will be created on the closing date. It can be viewed from 

    Accounting>> Journal Entry.

2. All income and expense entries will be moved to Retained Earnings

3. Account Period will be locked except for users who have permission to access (if given)

4. The Income Expense accounts will be reset.

     Note: In the Trial balance and Income-Expense report, there is a filter which will ignore the period closing and the information can be viewed across multiple years.