Topic: Closing a fiscal year...

WOW! I just finished the Journal entry to start the actual fiscal year.

As instructed in the wiki, I made a journal entry for the last day of my previous fiscal year.

Now I want to close this previous fiscal year and I got the following message:
The Retained Earnings Account or the Profit and Loss Year Account has not been set in System and General GL Setup

In simple words, what does that mean ?

Gaston

Re: Closing a fiscal year...

In System and GL Setup, Setup tab, you should choose a Retained Earnings Account and a Profit and Loss Year Account. You should create such an account last in your expense accounts. After closing the fiscal year, this account will hold the fiscal year profit.

Re: Closing a fiscal year...

Thanks Joe

I'm not too sure of what you mean. I already have a Retained Earnings Account and a Profit and Loss Year Account, and I still have the message :
"The Retained Earnings Account or the Profit and Loss Year Account has not been set in System and General GL Setup".

Also I don't understand what you mean by "You should create such an account last in your expense accounts." It's maybe related to my problem ?

I have the feeling that it better not to make any mistake here ... ;-)

Gaston

Last edited by huotg01 (11/06/2010 12:58:48 pm)

Re: Closing a fiscal year...

Are you sure that this information in System and General GL Setup is saved ok? It might just show the first account in the account list without have been saved.

The error message just indicate that.

/Joe

Re: Closing a fiscal year...

I think you are right Joe, but I'm so unsure about what should be committed there...

Any more deep docum about the closing and the role of the mentioned accounts ?

Thanks

Gaston

Re: Closing a fiscal year...

Hello Gaston.
If you havent done it, then create an Account for Profit and Loss Year somewhere last in the Expense group accounts.
Select this default account in the System and General GL Setup for the Profit/Loss Year. Also ensure that you have selected a correct account for the Retained Earnings. Then Update the info.
Now, make a backup of the company, so you can restore if anything goes wrong.
Go into Fiscal Years and close the year.
You should now have successfully closed the fiscal year.

/Joe
BTW. Read more about this in the fawiki.

Re: Closing a fiscal year...

Hi Joe

I have read most of the wiki, and for sure I have read the part about that. I also did made a backup.
BTW I even read an almost similar part of the forum where you almost said the same thing as here and where it was suggested to update the wiki. The point was not the lack of reading, but the lack of understanding, probably more related to accounting.

What I don't understand ia: "Also ensure that you have selected a correct account for the Retained Earnings." What is a correct account ? A bank account or another asset account? A liability account (I doubt about that one...) ?

Gaston

Re: Closing a fiscal year...

Hello.
Ok.
The Retained earnings account accumulates every years profit/losses. The Profit/Loss Year takes the years profit/Loss and put it here.
Let us say you have a profit during the year of $1000.
When you close the year the $1000 i credited the Retained earnings and the $1000 is debited the Profit/Loss Year. This is done automatically during closing by the last day of the fiscal year.
This is a common way of closing a fiscal year.
Also this way you can take profit/Loss statements for dimension during several years, because you still have the transaction values for Expense/Profit intact for the closed year.

/Joe

Re: Closing a fiscal year...

Thanks Joe.

Gaston

Re: Closing a fiscal year...

Dear Sir

After closing fiscal year let say 31 Dec 2010. The i open for new fiscal year from 1 Jan 2011 till 31 Dec 2011. Later come to audit adjustment on april 2011. How to put the audit adjustment for fiscal ended 31 Dec 2010 and roll back the adjustment to opening balance as at 1 Jan 2011

Re: Closing a fiscal year...

Hi,

Just reopen the year. make the adjustment and close it again. This should only be allowed by an admin in access roles.

/Joe

Re: Closing a fiscal year...

We have probably quite weird system of transferring profit/loss in Slovenia. There is a different account for profit and a different account for loss (for both a closing year and a new fiscal year). Can this anyhow be handled in an automatic way? As it is now, I guess not.

So, where should I start to work on the code (to check if we have a profit or a loss, and based on that use one or another pair of accounts - which obviously have to be specified both in an admin screen...).

What I would like to do is:
- add 2 fields in the setup screen ("loss account" and "transferred loss account", for example)
- if both accounts above are defined, and we calculate a current fiscal year loss, we use those 2 fields instead (otherwise, we do the default)

Or, would it be too much to ask developers to add this (with a setting in config file, where I have to explicitely enable those 2 fields being displayed - not to bother the whole world with this by default...)?  ;-)

Last edited by LUTi (04/06/2011 08:00:27 am)

Re: Closing a fiscal year...

I think this is rarely used worldwide, so - if you have free resources - you can try to implement it yourself, and then submit the code as contribution to be included in core source. The implementation should include:
. the two additional settings in System and GL Setup visible when config.php variable e.g. $separate_loss_act is set to true;
. implement changes in closing year procedures activated with the same variable.

Not too much work, and if you will try to mimic coding style used in FA core, there is a big chance to be included in some next release smile.

Re: Closing a fiscal year...

joe wrote:

Hello.
[...]
Let us say you have a profit during the year of $1000.
When you close the year the $1000 i credited the Retained earnings and the $1000 is debited the Profit/Loss Year. This is done automatically during closing by the last day of the fiscal year.
[...]
/Joe

Joe

"This is done automatically..."- What happens when someone re-opens a fiscal year ? Will the reverse actions be done automatically ?

Gaston

Last edited by huotg01 (07/19/2011 12:06:18 pm)

Re: Closing a fiscal year...

No, you will have to first void the closure Journal Entry. Then you can do whatever you want and close again.

/Joe