Closing the Fiscal Year in Dynamics 365 Business Central
Closing the Books
It’s that time of year again – when finance and accounting teams need to close the books!
Every ERP system has a unique month- and year-end closing process and Microsoft Dynamics 365 Business Central is no different. To ensure the process is smooth, we’ve created a breakdown to guide you through an efficient year-end.
Year-End Closing Process in Dynamics 365 Business Central
Accounting periods refer to the company’s fiscal year, which can contain several accounting periods, typically 12 months. However, there are times when you require a fiscal year that is less than 12 months, such as a stub year. Closing the fiscal year is one of the tasks for closing the books at year-end. After you close a fiscal year, the Closed and Date Locked check boxes are selected for all periods in the year. You cannot reopen a year or clear the checkboxes.
So, what does this mean?
It means that if you had to change the fiscal period from 12 months to a stub year of 4 months, for example, you would not be able to once the accounting period is closed and locked.
Therefore only close accounting periods when you are ready to close out the income statement to retained earnings at year-end once you are ready to move into a new fiscal year.
Note: The “Close Year” button on this page – only references locking the periods for a particular fiscal year, it does not mean that you have closed out your income statement to retained earnings. That is done in a separate window.
General Ledger Setup
The General Ledger Setup window is where you control posting into prior and future periods.
For example, Your fiscal year is January – December 2019. You run the year-end close process and close out the income statement to retained earnings and begin working in the new fiscal year 2020. In February 2020, your auditor provides you with adjustment entries that pertain to 2019. You would have to change the date in the “Allow Posting From” field to allow posting to December 31, 2019, in order to post those entries. Then run the close income statement process once again and post the resulting entry. Then once the entries have been published, change the date back to the beginning date you wish to allow posting – in this case, January 1, 2020, or the open period of 2020.
Steps to Closing the Fiscal Year
- Search “Close Income Statement”
- This window controls how the close-out entry will be posted.
- Once you have closed your accounting periods, the fiscal year ending date should populate with the year that is being closed.
- Select your general journal template
- Select your journal batch
- If you have the document number set to auto-generate it will populate, otherwise, assign a document number
- Enter your retained earnings account
- Select if you wish to post to retained earnings account by balance or by detail
- Click the ellipsis beside the dimensions to select the dimensions so that your income statement closes out your dimensions
- Then click “OK”
- Go to your general journal batch to find the entry
- Notice that the posting date has been updated with a “C” in front of the date. This indicates that this is a special journal entry for Closing The Income Statement
- Preview the entry and then post
- Go to General Ledger Setup and update the Allow Posting From and Allow Posting To dates to the earliest date you want to allow posting to the GL.
Want to speed up and simplify your year-end close? We can help!
If you have any questions about closing your year in Dynamics 365 Business Central, our team of ERP experts is here to assist you.
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