For understanding the year closure, I guess it is a good idea to talk to a local accountant.
You can do the final balancing yourself and if the balance type accounts are in balance FA will do no further operation.

But if you havent't balanced the balance type accounts, then FA will do these operations automatic for you. This is quite normal procedure for accounting systems to do that. The only requirements are that you have setup these accounts in the System and GL setup.

/Joe

from re-reading this thread it looks like when the year is closed things get accumulated automatically into profit/loss.

So where did you put the Capital Introduced? Class/Group?

It seems if I put it in the right place in the COA it will get rolled into the profit/loss automatically.

tom

I started by running a creditor for me and then paid it out to Capital Introduced once i got things set up and now if I buy something with my personal money, I either get the business to reimburse me for the expense to get it into the books or post it to Capital Introduced if I don't want it back.

I use the Loan from Shareholders for then I use personal money for expenses that can be written off to the business.

I do not what that money back, as the business usually ends up at an operating loss.

Maybe there is a better way to do this.

tom

http://www.cliffsnotes.com/study_guide/ … 21002.html
Pick your structure and get your chart of accounts to agree with the correct format.

I've had a go at replying a couple of times but have lost my post. Sorry.

If you are a company, you should leave your loan as is. If you are a sole trader or partnership, you need an extra account in the equity section where retained earnings called Capital Introduced. Journal you loans to this account. Leave the retained earnings as is. I also keep an account for drawings which records the money I take out and this is a bit simpler than what the link proposes how it should be treated if you got a CPA to prepare your books. The sum of these three accounts will give you what you want. A simple total of what the business is worth!

Last year when I needed to put money into the business I deposited it as a Loan from shareholders.

I want to convert that to a loss without messing with the bank accounts.

Oh My... I think the light bulb just went on...

Do I need to do two Journal Entries?

Like:

Debit 2680 Loans
Credit 9990 Year Profit/Loss

Is a Credit to 9990 a Loss?

tom

When you start a new Company, you should check that the Fiscal Year is setup correctly. If this is not your starting Fiscal Year, then you should start by creating the starting Fiscal Year. After you have corrected the starting Fiscal Year, you can delete other Fiscal Years if there are no transactions in them. Now set this new Fiscal Year on your company by selecting Setup tab, Company Setup.

If the first year is setup as Jan 01 2011 - Dec 31 2011 and your starting Fiscal Year should be Jul 01 2011 - Jun 30 2012, then you must first create a short dummy year, Jan 01 2012 - Jun 30 2012. Create another Year Jul 01 2012 - Jun 30 2013. Set the company to use this year. Now close and delete the year Jan 01 2011 - Dec 31 2011. Close and delete the short dummy year Jan 01 2012 - Jun 30 2012. And then create the correct broken Fiscal Year Jul 01 2011 - Jun 30 2012. After the creation, set this Fiscal Year as active on the company. You are now ready to make your transactions. You have 2 fiscal years and you are using the current one.

When you reach the end of your Fiscal Year, you have to create another new Fiscal Year. When you want to switch Fiscal Year on your company, go into company setup and do that. When you have finished your year-end entries, you may close the Fiscal Year.

A closed Fiscal Year can no longer be used for entries. When a Fiscal Year is closed, the difference between all asset and liability accounts are brought forward as a Journal Entry where the Default account for Retained Earnings is credited (if this is a profit, otherwise it is debited). And the default account Profit/Loss Year is debited (if this is a profit, otherwise it is credited).

You can have as many Fiscal Years running as you want, but for performance reasons you should not have more than needed (by your legislations). When you delete a Fiscal Year, the assets, liabilities and equities are brought forward. All other unneeded transactions such as documents are deleted.
Tips and Tricks
----------------------

/Joe

The retained earnings is the accumulated earnings during the years. This is yours or the shareholders money and can be destributed to you or the shareholders. Then this account will be debited and some of the bank accounts will be credited.

Yes maybe we should improve the Wiki a bit here, although some information about this is already there.
Will you check that, tom?

/Joe

How do I get rid of retained earnings?
Do I do a Bank Payment and select that account?

How about converting Loans from Shareholders to loss?
Pay it back somehow?

tom

I too had a couple of scotch last evening

/Joe

Thanks for the advice. I have it sorted now. This is what I did:
1. Poured myself a scotch
2. Drank about half of it
3. Made the prior year active
4. voided the closing entry
5. Ran a trial balance for prior year - it balanced
6. Tried to close the year again and got a new informative error message in 2.3.4 telling me I had the accounts set up wrong!
7. Lowered the level in my glass a bit more...
8. Made sure Retained Earnings was  in my Equity Class
9. Made sure Profit (loss) was in the new Expense Group I created above
10. Closed the prior year
11. Set the current Year as the active fiscal year
12. Ran a Trial balance and it Balanced!
13. Drained my glass and poured another to celebrate

EDIT:
14. Raised a toast to the FA development team!

You can eventually correct mistakes done by setting wrong year-end accounts in System an GL Setup by opening the fiscal year again. Void the Jornal Entry for the closing. And void other transaction mistakes. Make sure you use the correct year-end accounts. Then when it is correct, then close the year again.

/Joe

I have a problem here relating to the year end 306/2010 which I still don't understand after reading the Wiki and this thread. I need to fix this as the next year is fast approaching (end of this month).

I have a closed Fiscal year for year ended 30/6/2010
I had a loss of  $6657.33 for the year ended 30/6/2010 and the trial balance for the 2010/11 year is out by this amount CR as an opening balance

I have two accounts in the equity section of my GL
31000 Net profit (loss) - Opening Balance at 1/7/10 $6657.33 CR
32000 Retained earnings -   Opening Balance at 1/7/10 $6657.33 DR
Expense accounts are in a higher numbered class (19) than equity (15)

EDIT: I made a new expense group at the end of the expenses and moved retained earnings account to this group and now the Trial Balance is out by double this amount CR. and the retained earnings account has a NIL  Balance.

So how can I fix this?