The information in this article applies to:
Closing the year occurs when you advance beyond the twelfth month of your fiscal year. This article includes the following:
Year-End Procedures
Frequently Asked Questions
Advancing the Year
Reconciliation
Reports
Backup Routine
Archiving Clients
Perform the following procedures after the twelfth month in your reporting year. The references "Refer to:" link to additional details discussed later in the article or other Knowledge Base articles.
What happens to the chart of account balances when I advance the year?
When you advance the month or year, the current month's ending balance will be carried
over into the next month's beginning balance for the Asset and Liability accounts. The
Income and Expense accounts maintain the figures for the current month only and will start
out with a zero balance for the next month.
When advancing from the twelfth month of the fiscal year, do I advance the month and
then advance the year?
No. You run the Advance Current Posting Month program only once when advancing
from the
twelfth month of the year. The software keeps track of which month in the fiscal year
from which you are advancing and automatically advances the year along with the month.
Version 14.1 and Prior: The month/year end advancement program is called
Month/Year End Close-Out.
What is the difference between advancing the month and advancing the year?
The two procedures are essentially the same except that you are asked a few extra
questions when you advance the year. If the month from which you are advancing
is the last month of the current fiscal year, the message "Advance month to MM/YYYY" will
still be displayed. If you are advancing the year, you will be asked if you want
to save all journal entries for the two prior fiscal years, save only unreconciled journal entries, or delete all journal entries.
Version 14.1 and Prior: The message when closing out the month is "Closing out month and year MM/YYYY." If closing out the year, you will be asked if you
want to save the journal entries for the year. If you elect not to save the journal
entries, you will be asked if you want to save the outstanding check journal entries.
What journal entries should we make at the end of the year?
No extra journal entries are required prior to performing a year-end close-out. Because of
the way the software works, you do not have to close out the income and expense accounts
to the Profit/Loss account, nor do you have to close out the Profit/Loss account (income
summary) like you would when using a manual accounting system. However, at the end of the
year, you may want to close out the Retained Earnings account so that it starts with a
zero balance for the new year. This is accomplished by making manual journal entries. For
example, if you have a liability account called Previous Year's Retained Earnings and the
Retained Earnings account is set up as your Current Year's Retained Earnings account, you
would debit Current Year's Retained Earnings and credit Previous Year's Retained Earnings
(assuming there is a profit for the year). (Note: The year-end adjusting entries will
vary depending on many circumstances [e.g., if the firm is a sole proprietorship, a
partnership or a corporation, how the chart of accounts is set up, tax considerations,
etc.]. Consult your accountant for the proper adjusting year-end journal entries for your
firm.)
Why would I want to save the prior year's journal entries? Will I lose my
account balances if I do not save the journal entries?
If you want the ability to print the prior year's Journals, General Ledger or Trial
Balance, you will want to keep your prior year's journal entries. You will not lose your
account balances if you do not save the entries; however, you will only be able to print
Income Statements and Balance Sheets for the prior year. (Note: You may want to
consider "Archiving" the client instead of saving the previous year's journal
entries.)
Why would I want to save the current year's outstanding check journal entries when
advancing the year?
If you elect not to save the current year's outstanding check journal entries when you
advance the year, you will not be able to successfully reconcile your checks when using
the Check Reconciliation program (assuming any outstanding checks exist).
My accountant will not have the figures for our year-end adjustments ready until
March. Do I have to wait until then to advance the year?
No. You have two options:
At the end of each year, I make adjusting journal entries to bring the Type
"R" (Retained Earnings) account to a zero balance. What date should these
entries be assigned--the last day of the year I am closing out or the first day of the
new year?
Dating them the last day of your prior fiscal year will bring the Type "R"
account to a zero balance at the end of the closing year. Dating the entries with the
first day of the new fiscal year allows you to compare last year's Retained Earnings
balance to the current year's Retained Earnings balance on the Balance Sheet. You may want
to consult your accountant.
I printed out a Journal Entry Verification List, then advanced the year. Now I
need to change one of the journal entries that is dated for last year. I cannot find it
using the Record # on the verification list. I know that I saved the journal entries when
I closed for the year, so where is the journal entry?
When advancing the current reporting year, one of the options that the system asks is if you
want to save the journal entries for the year being closed. Even if that question is
answered "Yes," the system will still remove all journal entries for the
third
prior fiscal year. When that is done, it renumbers the existing journal entries to
different record numbers since they still exist for the prior, and second prior, year. The entry is still
there, but under a different record # than the verification list reflects. To find the
entry, run a Journal Report for the day of the journal entry. Then use the new record # to
access the record that needs to be changed.
Version 14.1 and Prior: Only the journal records for the current and
prior fiscal years are maintained. Therefore, when closing the current reporting
year the journal entries of the prior fiscal year will be removed.
How can I edit budget figures for the new year?
Besides editing each individual monthly budget figure, the software has four different
methods for editing all 12 monthly budget figures: 1) You can set all monthly budget
figures to the same amount; 2) You can enter a yearly amount and let the software compute
the monthly amounts automatically; 3) You can adjust all 12 monthly budget figures by a
specified amount; or 4) You can adjust all 12 monthly budget figures by a specified
percentage. Budget figures are entered on the Budget tab in the Chart of Accounts
data entry program.
What happens to the budget figures from last year if I change them for the new year?
The GLS software maintains up to three year's worth of budget figures in the
current client's Chart of Accounts. When you advance the year, last year's budget
figures will be copied to this year's figures. Therefore, once you advance the year, you can
edit your current year's budget figures without affecting last year's figures.
How many years of balances and journal entries are maintained in GLS?
Advancing the year deletes the second prior year's journal entries and optionally deletes
the journal entries for the prior year and the year being closed. For example, if you are on a calendar year and closing 2009, you will be given the option of retaining journal entries for 2009. If you had chosen to retain
2008 entries when you advanced into 2009, they will continue to be held until you have closed
2010. The 2007 journal entries (if present) will be deleted regardless of how
you answer the question.
Version 14.1 and Prior: Closing out the year deletes the previous year's journal entries and optionally deletes the journal entries for the year being closed out. For example, if you are on a calendar year and are closing out 2009, you will be given the option of retaining the journal entries for 2009. The 2008 journal entries (if present) will be deleted regardless of how you answer the question.
Advancing the year also deletes the second prior fiscal year's balances. For example, if you are on a calendar year and are closing 2009, depending on how long you have been using the software, you may have balances present for each month of 2009, 2008, and 2007. Closing out 2009 will delete 2007 balances thus allowing room for 2010 balances (the balances for 2009 and 2008 will still be present).
We need to maintain detail journal entries for at least 5 years. How can this
be done in GLS?
This can be accomplished with multiple sets of data stored under different client numbers
and data paths. Before advancing the year for the current client, add a new client and
transfer the current client's chart of accounts, balances and journal entries to the new
client. (Note: You can maintain up to 3 years of journal entries for each client.
In Version
14.1 and prior up to 2 years can be maintained.
However, doing so takes up extra disk space and really isn't necessary since the balances
for the prior year and second prior year are maintained thus allowing comparison figures
to print on the financial statements.)
When printing my year-end reports I discovered that the fiscal year is set
incorrectly. How can I correct this?
There are many variables involved when changing the fiscal year in the software. To
address your particular situation, please contact Technical Support.
What is the difference between a calendar year and fiscal year?
A calendar year is always January through December. A fiscal year is a 12 month period
that may begin with a month other than January.
I tried to delete an account in the Chart of Accounts file and received the message:
"Account has existing journal entries. All journal entries for the account must be
deleted before the account can be deleted". How can I delete these existing journal
entries and what will happen if I do?
You may want to consider waiting until the end of the year before deleting the account. If
one or more journal entries exist with amounts greater than zero, then all of the amounts
of the journal entries for the account would have to be changed to zero. A list of the
journal entries for the account can be printed by running a Journal Report. When printing
the report, use a beginning date of January 1st of the second prior year. Before deleting
an account, keep in mind that the account balance should be zero. The software does not
check for this. Deleting an account with a balance not equal to zero will affect the type
"R" Retained Earnings account. Recurring entries for the account will also need
to be deleted. In addition, it is important to make sure that the account number is
changed or deleted in other software that posts information to this account.
I advanced the year and saved all journal entries. Now, in the
Reconciliation program, outstanding journal entries from three years ago are not
being recognized. Why? How do I correct this so that the GLS Account Balance
shown on the report is correct?
GLS saves journal entries for up to three fiscal years. When advancing the year,
only the current and prior fiscal year's journal entries are saved (provided you elected
to retain them). Therefore, journal entries for the second prior year, outstanding or not, are
automatically deleted at year end. KB Article R10904, "GLS Reconciliation
Troubleshooting", includes details regarding how to resolve this issue.
Version 14.1 and Prior: Journal entries can only be maintained for the
current and prior fiscal year; entries for the second prior fiscal year are automatically deleted.
Are unreconciled journal entries saved when the year is advanced?
Yes, provided you select either the "Save all journal entries" option or the
"Save only unreconciled journal entries" option when advancing the year. If you choose to
save only outstanding journal entries, GLS will save all unreconciled journal entries for accounts that are designated as bank accounts, thus retaining the journal entries required for reconciliation.
I am trying to print a Journal Report for outstanding checks
before I advance the year, but the options under Checks are unavailable. How can I
select these options?
In order for the options under Checks to become available, the Beginning Check # on
the Journal tab must be greater than "0", the Entry Order check
box must be cleared, and a primary or secondary order of "Check" must be
specified on the Options tab. The Outstanding option under Checks will then be
available.
What reports should I print before advancing the year?
Run the same reports that you normally run, but be sure to run the reports for
year-to-date information as opposed to just month-to-date information. Some firms will run
their regular month-end reports and then re-run the reports for year-end. Consider running
the Trial Balance, Income Statement, Balance Sheet, General Ledger and Journal reports, as
well as any reports written using GLS Report Writer. Keep in mind that certain
information will not be available once you have advanced the last month of
the year. If you save all journal entries when you advance the year, you can
print all reports for the prior fiscal year except reports written using GLS Report
Writer. Choosing not to save journal entries when closing out the year will result in not
being able to get an accurate General Ledger, Journal or Trial Balance report. In order to
get this information, you must refer to a report that was run at year-end (assuming no
additional journal entries were made since the report was run), print the report from a
client that was archived before the year was closed, or restore from a backup that was
made at year-end.
I have several account numbers in my Chart of Accounts that my accountant says we
should not be using. We cannot delete the accounts because there are still journal entries
that we need for our records for at least another year. These account numbers have a
description "DO NOT USE" but they still show up on the financial reports. How
can I prevent these account numbers from printing on my current financial statements?
If the accounts are header, total, or comment accounts, go into the Chart of Accounts,
pull up the account numbers one at a time and clear the Print Option check box on
the Accounts tab.
If the accounts are detail accounts, you do not have the option to disable the Print Option for the accounts. If the detail account has a zero balance, clear the Print Zero Balance Accounts check box on the Options tab of the report. However, this will also prevent any other zero balance accounts from being included.
Alternatively, you could use departments to exclude the accounts. If you are not using departments, you would need to make sure all detail accounts have a department of "1" and all other accounts have a department of "0". Assign the accounts you want excluded to a department of "2". Then you can run financial statements for department 1 through 1, thereby excluding the accounts assigned to department 2. Similarly, if you are already using departments, you can assign the accounts you want excluded to an unused department (such as 30) and run your financial statements for departments 1 through 29.
I ran a Trial Balance, Balance Sheet and Income Statement at the end of the year.
What information can be compared on these reports to verify that they are in balance?
The following information can be compared:
After printing the Balance Sheet and Trial Balance, I noticed that the Retained
Earnings figure is different. How is the Retained earnings Figure calculated for these two
reports, and what would cause them to be different?
In order to calculate the Retained Earnings figure (Account Type "R"), the
software subtracts all of the Liability accounts (Account Type "L") from the
Asset accounts (Account Type "A"). Any Owner Equity accounts, will be included
with the other Liability accounts because they are set up with an Account Type of
"L". The Trial Balance retrieves the Ending Balance for the Retained Earnings account
directly from the Chart of Accounts. The retained Earnings figures for the Trial Balance
and Balance Sheet should be the same.
If a one-sided journal entry, or an unbalanced journal entry was made (for example, a $50 debit and a $60 credit), then the Retained Earnings figure on the Trial Balance and Balance Sheet will not match. Discrepancies in the Retained Earnings account can also be caused when incorrect initial balances are entered or when a Balance Sheet account is edited incorrectly. Furthermore, changing the Balance Type, Account Type or Account Balance for an account may cause discrepancies on reports.
When the Data File Integrity Check program is run , an error 76 will be reported if the balance for the Retained Earnings account (type "R" account) does not match the calculated retained earnings amount for a specified month. This comparison of the Retained Earnings account and the calculated retained earnings amount is performed for every month up through the current month. If the figures do not match, an error 76 is reported. The error 76 will be reported for each month's balance that is incorrect, and the balances will be corrected automatically. For more information, please refer to KB Article R10980, "DFIC Error 76 - Retained Earnings Mismatch".
When I ran my Trial Balance, a message printed on the report indicating that my
"Debits and Credits Do Not Balance." I included all accounts on the report. Is
there a report that I can run to find why they don't balance?
Yes. You can print a Journal Report that includes all entries for all accounts for the
month. When running the report, select to sort in Entry Order. This report will show
entries for the date range selected in the order that they were entered. Compare debits
and credits on this report to locate one-sided journal entries or other errors made when
posting entries.
If the balances mentioned above are not matching, what is the best way to correct
them?
Contact our Technical Support for assistance.
We still have not received our year-end adjustments from our accountant. Currently
our Retained Earnings Account has a beginning balance for January 2010 that will be
removed when we make our closing entries for 2009. We normally compare our Retained
Earnings Account balance with the Year-to-Date Profit/Loss figure on our Income Statement.
Is there a different number we can compare until we make our closing entries to verify
that our reports balance?
One way you can compare is to subtract the January 2010 beginning balance for the Retained
Earnings Account from the ending balance in the Retained Earnings Account for the months
you are comparing. Compare this figure with the Year-to-Date Profit/Loss figure on your
Income Statement. Another option would be to compare the Gain/Loss posted to Retained
Earnings on the bottom of your Trial Balance or General Ledger Report to the Month-to Date
Profit/Loss figure on your Income Statement.
I advanced the fiscal year last week. This
morning I received the adjusting entries from our accountant and entered them into the
software. When I ran my Trial Balance and Balance Sheet and compared them, the balances
were incorrect. The balances on the Balance Sheet match what my accountant said they
should be after making the entries. What happened to my Trial Balance?
It appears that when you advanced the year, you chose not to save journal entries for the
prior years. The Trial Balance calculates balances by taking the beginning balance
from the Chart of Accounts (which is the ending balance from the prior month) and adding
or subtracting journal entries for the time frame specified. Since these journal entries
are no longer there, the Trial Balance is not accurate for this period.
If you archived the client, you can use the Select GLS Client program to switch to the archived client and post your adjusting entries. As long as all entries made to the current client are also made to the archived client, the Trial Balance can be run in the archived client. It can then be compared to the Balance Sheet of the current client.
If you saved the journal entries from the prior year and the balances are still incorrect, contact Technical Support for further assistance.
Is your backup routine adequate?
Even if your firm is making regular backups, we recommend that you occasionally restore
the data from one of your backups to a directory other than the program directory to check
the integrity of the data. (Note: The data for each client is maintained in a separate
directory. Your backup routine should include the paths for ALL clients.) Also
make sure that you rotate your backup media so that you always have more than one backup.
It is important that the Data File Integrity Check program be run before making backups
and particularly important that it be run before making a year-end backup. The purpose of
running the Data File Integrity Check program is to verify that there are no errors in the
data files before making a backup. Make sure that the year-end backup is performed before
advancing the year. Many firms save their year-end backup as a permanent historical
record. See KB Article R10456, "Testing Your Backup System" for
more information.
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