Published Date:12 Nov 2017
FAQ No:0063
End of Year - A Case Study

First Year of Operation - Nominal Ledger

Current Year (January 2018 – December 2018)
Previous Year (non existing)
Archive (non existing)

Opening Balance in the Retained Earnings account in the Current Year 2018 is (175,068.22)





Second Year of Operation (After End of Year of 2018) – Nominal Ledger

Current Year (January 2018 – December 2018)
Previous Year (January 2017 – December 2017)
Archive (non existing)

Data set of 2018 is moved to the Previous year and the net profit/loss of 2018 is calculated and posted as balance brought forward in the Profit & Loss (Year) in the current year as shown below.



After all postings are complete and audit adjustments are entered in the previous year, a journal entry is required to be posted in the Previous Year to transfer the amount in the Profit & Loss (Year) account to the Retained Earnings Account. If this entry was not posted by user, the system will prepare this entry during the EOY process. Both the Retained Earnings and the Profit & Loss Account for the Year are Identified in the System Control Accounts.

Dr Profit & Loss (Year) 148,271.76
Cr Retained Earnings 148,271.76

N.B. This value should reconcile with the audit accounts.

On posting of this journal and running the Update Opening Entries, the P&L for the Year should not have any opening balance in the Current Year. This will confirm that the Trial Balance of the Previous Year reconciles the audit accounts. The accounts balances will look like below



N.B. If the above journal posting is not done by the user, when processing the next EOY the system will warn you that a balance brought forward exists in the Profit & Loss (Year) account and will prompt the user to transfer that balance to the retained earnings (see End of Year FAQ http://faqs.shireburn.com/faqs/0004)



Third Year of Operation (After End of Year of 2017) – Nominal Ledger

Current Year (January 2018 – December 2018)
Previous Year (January 2017 – December 2017)
Archive (January 2016 – December 2016)

The data set of 2017 is moved from the Previous year to the Archive. The data set of 2018 is moved from the Current year to the Previous year and the net profit/loss of 2018 is calculated and posted as a balance brought forward in the Profit & Loss (Year) in the current year (2018)


After all postings are complete and audit adjustments are entered in the previous year, a journal entry is required to be posted in the Previous Year to transfer the amount in the Profit & Loss (Year) account to the Retained Earnings Account. If this entry was not posted by user, the system will prepare this entry during the EOY process. Both the Retained Earnings and the Profit & Loss Account for the Year are Identified in the System Control Accounts.

Dr Profit & Loss (Year) 451,420.41
Cr Retained Earnings 451,420.41

After this journal the accounts balances will look like below



Category:End of Year