Use Period Closing to perform both period and year financial closings. The closing of a period is primarily for restricting data entry to an accounting period. After you close a period, only those users who have permission to post to a closed period can book entries to a closed accounting period.
The purpose of a year-end close is twofold. One, to make offsetting entries for the fiscal year Revenue and Expense (Income Statement) accounts and calculate retained earnings. Two, to roll the current year-ending balances in the Balance Sheet accounts into the next fiscal year’s opening balances. This process may be run at any time because its sole function is to carry forward Balance Sheet account balances from one year to the next.
Year-end closing entries are a standard bookkeeping mechanism, and are used to close out income statement accounts to zero and book the net income amount to the retained earnings account at the end of the year. A typical year-end closing entry debits revenue accounts (because they are credit balance accounts), credits expense accounts (because they are debit balance accounts), and creates a debit or credit for the remaining amount to the retained earnings account.
Year-end closing entries are marked with the unique transaction code of YE. Year-end entries are made by using one journal entry which is booked to the last non-adjustment period of the applicable fiscal year. The last day of the fiscal year is used for the journal date.
Closing the Period/Year
Select Financials | General Ledger | Period Closing.
In Type, select the kind of closing that you want to perform. The options include the following:
Calendar Period – Select this option to close a single accounting period.
Fiscal Year – Select this option to close the fiscal year.
In Year, select the year for the period/year that you want to close. The default is the current fiscal year from Calendars.
Select the module that you want to close in Module. The options include the following:
All – Selecting this option results in all modules being closed when you click Close Period.
Billing – Select this option to close only the Billing module.
Cash – Select this option to close only the Cash module.
General Ledger – Select this option to close only the General Ledger module.
Payables – Select this option to close only the Payables module.
Projects – Select this option to close only the Projects module.
Receivables – Select this option to close only the Receivables module.
Select the period that you want to close in Period.
The Calendar Period Status area displays the current period for each module that you have set up. This is display only.
The Fiscal Year Status area displays the status of each year that you have set up. This is display only.
Click Close Period to start to process.
When the closing process is complete, close Period Closing.