The year-end process is a two-step process in Dynamics 365 Business Central & Dynamics NAV. The first process is to close the accounting periods and the second process is to transfer the balance in the income statement general ledger (GL) accounts to the retained earnings account. However, these processes may vary depending upon additional reporting setup and dimensions.
Year-End Close Setup Tasks
When closing the year end, these setup steps first need to be taken.
- If you use journal batch or line workflow approvals, then disable them.
- If you have enabled mandatory dimensions during your fiscal year, you will need to remove the code mandatory from each G/L account dimension. For example, if a global dimension was made mandatory during the fiscal year, Dynamics NAV or Business Central is attempting to post values to prior year entries without dimensions, which will lead to errors. Our recommendation is to remove the code mandatory from each G/L account dimension, perform the fiscal year end close within NAV or Business Central, and then apply the mandatory dimension restrictions back to each master G/L account record.
The following steps will help guide you through the year-end process:
Step 1: Search for ‘Accounting Periods’ in the search box.
Step 2: Review the accounting period to be closed in the accounting period window. If the period to be closed has not already been closed, then click on the ‘Close Accounting Period’ function on the ribbon. If the accounting period to be closed is not already created, then refer to Steps 5 and 6 first.
Step 3: Upon clicking the close year function, the system asks the user to review the accounting periods to be closed. After reviewing, the user can click ‘Yes’ to run the close year function.
Step 4: Once the close period function is executed, closed, and date locked, Boolean of the accounting periods gets checked.
Note: Once a period has been closed it is impossible to reopen these. Entries that get posted to a period after a period has been closed within the system will be marked as a prior period.
Step 5: Create a new fiscal year, if not already created, by using the ‘Create Period’ function.
Note: This is not applicable to companies following retail accounting periods.
Step 6: Enter the starting date of the period to be created and period length, then click ‘OK’.
Step 7: Before we transfer the income statement balances by running the close income statement batch job, we must ensure that the balance sheet accounts are marked as ‘Balance Sheet’ and that the income statement accounts are marked as ‘Income Statement’ in the Chart of Accounts. The system uses this field to transfer balances to the retained earning account.
Step 8: Search for ‘Close Income Statement’ in the search box.
Step 9: Enter the parameters as suggested in red text shown in the image below, and then click ‘OK’.
Step 10: If additional reporting currency has been set up in the system after clicking OK, the system will transfer the balances from Income Statement to the Retained Earning account automatically and the transaction will not be available for the user to review. For other systems it would create a journal line for review in the General Journals.
Step 11: Search for ‘General Journals’ and select the batch created for the year-end process.
Step 12: Review the transactions and click ‘Post’. This action will post the balance to the retained earning account.
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