Close a fiscal year

Closing a year moves every income and expense balance into Profit & Loss Account with a journal on the year's last day, writes the closing balance-sheet balances as the next year's opening balances, and locks all twelve periods so nothing more can post into the year. Do it once the year's entries are complete and reviewed, usually after the CA signs off.

Before you start

• Every entry of the year is posted: demands, receipts, payouts, commissions, revenue runs and manual vouchers. Once the year is closed, nothing can post into it until it is reopened.
• An earlier year that is still open must be closed first.
• If you typed opening balances for the next year by hand, closing replaces them with the closing balances of this year.
• The books still hold an active Journal voucher type (code JRNL) and an active 3200 Profit & Loss Account ledger; the closing journal needs both.
• Permissions, in the role editor's words:
  • the View permission on Reports and on Books to review the statements;
  • the Edit permission on Books to open the next year and to close or reopen a year (the default Administrator and Finance Lead roles);
  • for the drafts, the Post permission on Vouchers to post them, the Edit permission to cancel them, or the Delete permission to delete them.

Steps

1. In the sidebar open Accounting > Reports, choose the Profit & loss tab and pick the year in Fiscal year. From and To snap to the whole year (up to today, while the year is still the current one) and you see the Direct income, Direct expense, Gross profit and Net profit (or Net loss) tiles above the income and expense trees. See Profit & loss.
2. Choose the Balance sheet tab and pick the same Fiscal year. As of moves to the year's last day (today, while the year is still the current one). Check that the badge reads Balanced; "Difference <amount>: check opening balances" means the opening balances need fixing first. See Balance sheet.
3. In the sidebar open Accounting > Books, open the books and choose the Fiscal years tab. You see one card per year, newest first, each with its dates and "N of 12 periods locked". See Fiscal years.
4. If the next year has no card yet, click Open next year. The confirmation "Open the next fiscal year?" reads "The year after FY <name> (from <date>) will be opened with 12 monthly periods. Opening balances for it are entered under Opening balances."
5. Click Open year. You see "Fiscal year <name> opened with 12 periods." and a card for the new year.
6. On the card of the year to close, click Close year. The dialog "Close FY <name>?" opens: "Income and expense balances of <start> to <end> are closed into Profit & Loss Account with a journal on the last day, the closing balance-sheet balances become the next year's opening balances, and every period is locked." Below it, a checklist of two lines, each marked Ready or Blocked.
7. If the second line reads "<n> draft voucher(s) to post or cancel first", click Show beside it. The Vouchers list opens filtered to Draft for these books. Open each draft and post it, cancel it or delete it (see Post a draft voucher and Reverse a posted voucher or discard a draft) until the list is empty.
8. Back on the Fiscal years tab, click Close year on the year again. Both lines now read Ready: "Next year FY <name> is open" and "No draft vouchers in the year".
9. Keep or change the Closing journal narration; it starts as "Year-end close FY <name>" (at most 255 characters). Close year stays greyed out, with no reason on hover, while a checklist line is Blocked.
10. Click Close year. You see "FY <name> closed: <profit|loss> of <amount>, <n> opening balances written." The year's card now shows "Closed <date>" and "12 of 12 periods locked", and its period switches can't be changed.
11. Open Reports > Profit & loss for the closed year. The figures are the same as before the close, and the summary adds " · closed year (closing journal excluded)". The balance sheet also leaves the closing journal out, though it shows no note.

What happens next

• A Journal is posted on the year's last day that clears every income and expense ledger into 3200 Profit & Loss Account. The trial balance and the ledger report show it; the profit and loss and the balance sheet leave it out, so they read the same before and after.
• The next year's Opening balances now hold the closing balance of every asset, liability and equity ledger, 3200 included. Any amounts typed there before were replaced. The year shows as "FY <name> (closed)" in that tab's year list, and its own openings are fixed.
• No voucher, manual or automatic, can post into the closed year. Posting a voucher dated in it is refused with "That fiscal year is closed."
• To correct a closed year, click Reopen year on its card. The dialog "Reopen FY <name>?" explains: "Reopening reverses the closing journal (<voucher no>), removes the next year's opening balances and unlocks the periods. The following year must still be open." Click Reopen year; you see "FY <name> reopened; <n> periods unlocked." Post the corrections, then close the year again. Until you do, the next year has no opening balances at all.
• Nothing stops you closing a year before its last day once the next year is open, so wait until the year's entries are complete.

If something goes wrong

• "Next year not opened yet (open it under Fiscal years)" or "Open the next fiscal year before closing this one.": do steps 4 and 5 first. "Close the earlier fiscal year first." after clicking Close year: an older year is still open; close it first. "Post or cancel every Draft voucher of the year before closing it.": a draft is left (step 7). See Fiscal year cannot be closed or reopened (trouble.accounting.cannot-close-fiscal-year).
• "These books have no active JRNL voucher type" or "These books have no active ledger copied from template 3200; sync templates": the closing journal can't be built. Reactivate the Journal voucher type or the 3200 ledger, or run Sync from templates. See the same article (trouble.accounting.cannot-close-fiscal-year).
• A draft won't post while you clear the year ("Debits and credits must be equal", "Period <n> of <FY> is locked" and similar): fix, cancel or delete it. See Voucher cannot be posted (trouble.accounting.cannot-post-voucher) and No open period for the date (trouble.accounting.fiscal-year-missing).
• "FY <name> is closed; reopen it first." or "Reopen the following year first." when reopening: reopen the later year first.
• "Difference <amount>: check opening balances" on the balance sheet: the opening balances of the year don't balance. See Trial balance not balanced (trouble.accounting.trial-balance-not-balanced).
• No Open next year or Close year button: your role lacks the Edit permission on Books. See No access (trouble.admin.no-access).

Related

• Fiscal years
• Vouchers
• Profit & loss
• Balance sheet
• Trial balance
• Opening balances
• Post a draft voucher
• Bring forward opening balances