Generate Closing Entries

You must create closing entries for an accounting cycle before you can close a fiscal year. Although you can manually create closing entries in Journal Entry, you can use the Generate Closing Entries command to automatically perform this action for you.

Important: When a cycle is closed, it or another previously closed cycle may be locked depending on the Cycle Lock value set in System Configuration. Locked cycles can't be re-opened.

What happens when you create closing entries?

The closing entries zero the balances for all temporary accounts -- those accounts with an account code that has a controlling element value with the account type of Expenditure, Revenue, Other Financing Uses, or Other Financing Sources.

For each temporary account with a non-zero balance, one transaction line is created to zero the account.

The difference between the credits and debits of all temporary accounts for a fund — and any other static elements — is entered as a single transaction line for the account code that has the controlling element defined as the Closing Fund Balance balancing account type for the fund. Thus, in the closing transaction a fund's Closing Fund Balance account shows the amount and direction of change in financial resources for the fund in that cycle.

Before you generate closing entries

Run the Statement of Revenues & Expenditures and Changes in Fund Balance Report and/or the Trial Balance Report before generating closing entries. These reports show the balances of the temporary accounts that will be used to create closing entries.

Closing entry options

• Transaction date: Decide what date you want to use for the transaction date of the closing entries.

• The last day of the final period in the cycle being closed.

• For example, say the last two periods in the cycle are dated 7/01/2016 to 7/31/2016 and 8/1/2016 to 8/31/2016, and you want to use the first day of your new fiscal year -- 7/1/2016 -- as the date for the closing entries. You'll close all but the last two periods.
  With the closing entries dated after the last day of the old year, revenue and expenditure reports will still show balances if run through the last day of the year.

• Budget & Encumbrance transactions: Decide if you want to clear out temporary account balances for Budget and Encumbrance transactions. By default AptaFund will clear the temporary balances for Actuals accounts. When running the Generate Closing Entries process, you can also choose to clear Budget and Encumbrance accounts. The opening entries in the new accounting cycle do not move any permanent account balances in the Budget or Encumbrance ledger.

 Generate closing entries

1. Set the Accounting Cycle for the cycle you want to close by selecting it from the upper right corner.

2. Select Accounting Cycle from the Chart of Accounts menu, and the Accounting Cycle window opens.

3. Click the Cycle Name link, or check the box for the accounting cycle you want to close, and click Edit. The Accounting Cycle Detail window opens with the Accounting Periods tab displayed.

4. Close all the periods for the old cycle except the period containing the date you want to use as the transaction date for the closing entries. Note: You can check the box beside the Period Name column header to select all periods in the cycle, and then uncheck the boxes for the periods you don't want to close. Click here for more information on the transaction date.

5. Click the Return to Accounting Cycle(s) link in the upper right corner of the window.

6. Check the box for the accounting cycle you want to close, if it isn't already checked, and select Generate Closing Entries from the More menu. The Generate Closing Entries window opens. The Transaction Date defaults to the last day of the final period in the current cycle.

7. Change the default Transaction Date as needed.

8. Check the Post Transactions and Close Cycle boxes.

9. Optional. Check the boxes for Zero Encumbrance Balances and Zero Budget Balances. Click here for more information.

10. Click OK.

• If you get a disabled account code warning, continue with step 10.

• If you don't have any disabled account codes, you'll see a message that the closing entries were generated successfully.

11. Optional. Print the list of disable accounts from the warning window to aid in enabling the disabled accounts with non-zero balances.

12. Open the Chart of Accounts window, and enable the disabled accounts.

13. Return to the Accounting Cycle window, and select Generate Closing Entries from the More menu.

14. Change the default Transaction Date as needed.

15. Check the Post Transactions and Close Cycle boxes.

16. Optional. Check the boxes for Zero Encumbrance Balances and Zero Budget Balances. Click here for more information.

17. Click OK. You'll see a message that the closing entries were generated successfully.

When AptaFund creates closing entries, it may create new account codes, such as balancing accounts. So we strongly recommend that you re-roll the Chart of Accounts to map any new accounts to the new fiscal year. Please note that this will not roll the whole Chart of Accounts again. Instead, it will just roll accounts that have not already been rolled.

Return to Accounting Cycle Overview