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Financial Periods

Managing your financial periods is a critical year-end accounting task.

Navigation: Accounting -> Financial Periods

Manage Financial Periods

Overview

A financial period defines the start and end dates of your accounting year. All transactions must fall within an open financial period. You can create multiple periods, but they cannot overlap.

Add Financial Period Form

The Closing Process

At the end of your financial year, you must close the corresponding period. This action is final for that period and performs several important functions:

  1. It prevents any further transactions from being posted to that period, locking down your books.
  2. It calculates the Net Income (or Loss) for the year by summing up all Revenue and Expense accounts.
  3. It automatically creates a "Closing Journal Entry" that zeroes out all Revenue and Expense accounts.
  4. It transfers the calculated Net Income into the Retained Earnings account in the Equity section of your Balance Sheet.
Warning: Before closing a period, ensure all transactions are entered and correct. Also, ensure any overlapping VAT periods have been closed first.

Reopening a Period

If you discover an error after closing a period, you can reopen it to make corrections. Reopening will reverse the closing journal entry. You must be careful to re-close the period after making your adjustments.