As the holidays approach, it makes me think of closing the fiscal year. Here is a checklist and the step-by-step process for closing out 2021 in Microsoft Business Central. As always, our team of support experts are here to help if you need anything.
YEAR END CHECKLIST
- POST ALL OPEN JOURNALS: Payments, Deposits, Cash Receipts, Payroll.
- POST RECURRING ENTRIES: for the year to be closed.
INVENTORY RECONCILIATION: As of End of Fiscal Year Date INVENTORY REVALUATION – Depending on your Industry – or to correct errors, you may be able to re-value inventory as part of the year-end process. Now is the time.
- Run the Adjust Cost Routine
- Run the Post Cost to G/L Routine
- Run the Inventory Reconcile to G/L Report – By Inventory Posting Group
- Tie the Received Not Invoiced Posted to G/L to your Inventory Accrual Account (Liability)
- Tie the Shipped Not Invoiced Posted to G/L to your Accrued COGS Account (Contra Asset)
- Tie the Net Inventory Interim Posted to G/L to your Inventory Interim Account (Asset)
- Tie the Inventory Posted to G/L to the Inventory Asset Account
- ACCOUNTS RECEIVABLE RECONCILIATION: Tie the Customer Trial Balance Report to the A/R Account – By Customer Posting Group (This report ties to the G/L – Aged A/R may not tie if you use Foreign Currency)
- ACCOUNTS PAYABLE RECONCILIATION: Tie the Vendor Trial Balance Report to the A/P Account – By Vendor Posting Group (This report pies to the G/L – Aged A/P may not tie of you use Foreign Currency)
- FIXED ASSETS: Calculate Depreciation and Post Depreciation to the G/L.
- MANUFACTURING: Complete all “Finished” Production Orders and reconcile WIP values.
- BANK ACCOUNTS: Reconcile each Bank Account using the Bank Reconciliation Module. Compare the Book Values to the Chart of Accounts for each Bank Account Posting Groups G/L Account.
- MULTI-CURRENCY
- Enter the Currency Conversion Rates that will be used for gain/loss valuation at the end of the fiscal year.
- Run the Gain / Loss conversion routines – One Currency at a time – for Customers, Vendors and Bank Accounts.
- LOCK OUT POSTING TO YEAR THAT WILL BE CLOSED
- Change the Posting Dates in G/L Setup
- Check User Posting Setups – Only Set Values for users that are Exceptions
INVENTORY RECONCILIATION: As of End of Fiscal Year Date INVENTORY REVALUATION – Depending on your Industry – or to correct errors, you may be able to re-value inventory as part of the year-end process. Now is the time.
YEAR END CLOSE PROCEDURE
- YEAR-END CLOSING PROCESS
- Verify that the upcoming Fiscal Year calendar exists in the Accounting Periods setups, and that it is correct. If it is not there, or not correct, then create the periods for the next year or two.
- Navigation to Year End Procedures
- Chart of Accounts>Process>Close Income Statement
- The Year must be closed first by navigating to Accounting Periods> Close Year
- Select Close Year, the following message will appear, this does not mean that you cannot post in a prior closed period it just means that the actual fiscal period end date cannot be changed. You are able to post in any period past or future in BC
- Close Income Statement
- Once the year has been closed you then Navigate to Chart of Accounts>Process>Close Income Statement
- The Page will auto populate with the next fiscal year to be closed based on the last closed Accounting Periods, you can go back and re-close a year that has already been closed to Retained Earnings if you had to make additional entries, like Auditors Entries.
- You must select a General Journal Template, this will always be General, you must then select a Batch, the batch name does not matter. A document number must be assigned. Select the Retained Earnings G/L account and the Posting Description will auto default with Close Income Statement, this can be changed
- If you are using Dimensions you should always close the Income statement by Dimension, you click on the ellipsis …
- All Dimensions should have a check mark in the Selected field. This will ensure that reporting in the future will be correct as you do not want the close to be done with Blank Dimensions
- The system will then go thru and sum all the closing by Dimension and upon completion it will create a General Journal that will then need to be posted. You will see the following message on the screen. This routine can take some time to process depending on the number of entries and number of dimensions. It is not recommended that this process be run during normal work hours but when the load on the system is at its’ lightest.Upon completion you will receive the following message
- You should then navigate to the Journal and verify the Value being posted to Retained Earnings. The Posting Date of the Entry will have a C in front of it, to designate it as a Closing Entry.
- Post the Journal.
- Year End Close is complete.
*As stated above you can continue to make entries into the previous year and run the close income statement as many times as required.
- FINANCIAL STATEMENTS AND BUDGETS: Create the Budget for the upcoming Fiscal Year – following your organizations business rules.
- Run the Year End Balance Sheet
- Run the Year End Income Statement
- Run any Statements of Operations
- Run the Trial Balance Report and verify balances
- Run Statement of Cash Flows
If you have questions or need assistance, please reach out to our team of Business Central experts. We are here to assist you. Email us at sales@crestwood.com.
