• From: Philippines
  • Registered: 07/19/2020
  • Posts: 15

Topic: Clarification on Fiscal Year and Closing GL Transactions

I would like to ask for help on clarification with the two pages?

1) Difference of Fiscal Year and Closing GL Transactions page?

2) In my perspective, Closing GL Transactions page - automatically closes a fiscal period. Meaning it would set a fiscal period flag to close automatically and create a journal entry for the Retained Earnings and Profit/Loss current year. Is this correct?

** Because after closing the transaction. No journal entry is done for retained earnings and profit/loss year. And the fiscal year flag-close is still 'No'.


What is the proper way of closing a fiscal period? Thanks.

  • Registered: 04/19/2020
  • Posts: 60

Re: Clarification on Fiscal Year and Closing GL Transactions

Closing GL Transactions is used to lock the transactions to prevent entering new transactons up to specified date.
For example, accountant have done quarterly Tax report, he should close GL transactions to prevent new data that will affect the final tax report.
Closing a fiscal period is on Setup->Fiscal Years.

flpages's Website

  • From: Pakistan, Karachi
  • Registered: 03/03/2015
  • Posts: 650

Re: Clarification on Fiscal Year and Closing GL Transactions

@jcnew the Closing Journal Entries are not done automatically. You need to close your Profit and Loss Accounts manually to shift them to Retained Earnings.

When you close a Fiscal Year then FA ensures that all previous fiscal years are also closed.

Closing a Fiscal Year also sets the sys_pref variable gl_closing_date to the Fiscal Year's ending date.

But if you want to set the 'gl_closing_date' during the fiscal year i.e. after one quarter you can use Closing GL Transactions page for this purpose to restrict gl transactions before that date.

www.boxygen.pk

boxygen's Website

  • From: India, TN, Karur
  • Registered: 05/16/2014
  • Posts: 1,181

Re: Clarification on Fiscal Year and Closing GL Transactions

1. Closing fiscal year will close the gl entires. There after you can't make new entries into the system.

2. The retained earnings will be put another journal entry on next fiscal year. I think so it works like expected. But I am not sure.  You can test it urself..

Create new fiscal year and put one purchase and sales invoices.  Than close that fiscal year and see the journal entries in next year. If you see anything new. And just check the balance from last year. You can get it.

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kvvaradha's Website

  • From: Philippines
  • Registered: 07/19/2020
  • Posts: 15

Re: Clarification on Fiscal Year and Closing GL Transactions

Hi,

Thanks flpages, boxygen and kvvaradha! I think you clarified my question.

So In summary,

1) Closing GL Transactions - purpose is within the fiscal period, it locks entries up to the entered date.

2) Fiscal Year - entirely different, if you want to close the fiscal year. Just edit, and select Yes to close. And that will automatically, create a journal entry for the Retained Earnings and Profit/Loss account. And closes the edited fiscal year.


Thanks for your kind replies!