Profit and Loss Close

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Introduction

When you close the year, all net operating accounts are cleared to zero and booked to the retained earnings account or to the profit and loss closing account (this is set up as the Retained Earnings account on the Process Accounts tab in the Organizations screen). January month end close can be run before the year end has been run, however, the uncleared amounts are still in the balances. 

The profit and loss closing (P&L Close) process can be run as many times as you want, for one organization at a time. This allows you to close the year, make required adjustments, and then close the year again.

Note the following:

• In the year end accounting period, if you have run P&L Close for the year and accounts that are closed to retained earnings are included in the restatement process, P&L Close must be reversed before running restatement again.

• If you operate and report in different currencies, any adjustments after P&L Close should be made using a Currency Adjustment voucher type (signified by the Voucher Type having the Currency Adjustment box checked) so the correct amount for each currency can be entered. If Restatement is run in error, it must be reversed via the Reverse Processing Vouchers screen

• Before running P&L Close, ensure that the gross accounts all clear to 0. If P&L Close is run and the gross accounts do not clear to 0 you could have problems with the gross accounts not clearing in the subsequent year. 

• Before running P&L Close ensure all reports have been run. Most reports do not have the option of Before P&L Close. 

Running Year End

To run the year end process

1. Navigate to the menu and select Financial → Profit and Loss Close

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2. Enter closing information.

3. Enter the print information in the Print section.

4. Click the Save/Commit icon to save the process parameters. If you save these parameters, you can recall them by clicking the Re-query button the next time you run the process.

5. Click the Submit button to submit the report. A pop-up message screen appears when the process is successfully submitted.

6. Click the OK button to acknowledge the message.

7. Repeat steps 2 through 6 to run the process for other organizations or accounting periods.

8. Click the Exit icon to close the screen.

Running a Year End when Fiscal Year End is Changed

If you need to run a shortened year end because of a change to your Fiscal Year End, you will have to change the Fiscal Year End for your Organization in Master Data before running your Profit and Loss Close.  If you have changed your year end from December to another month you will have to complete the following steps:

1. Navigate to Master Data → Organizations

2. Query the Organization that has the new year end and change the Fiscal Year End from December to the new fiscal year end

3. Navigate to Financial → Profit and Loss Close

4. Submit Profit and Loss Close with the following parameters: 

Year End Details

When you run the Profit and Loss Close process (GELU038), the system automatically:

• Creates a voucher

• Posts the voucher to the general ledger (G/L)

• Prints a report detailing the profit and loss closing entry 

CREATES A VOUCHER

This voucher clears the entries from the net operating accounts and books them to the retained earnings account.

The net operating accounts are accounts that have class codes RV (Revenue), RY (Royalty Expense), EX (Operating Expenses), GA (General, Administrative and Financial Expenses).

The balances are selected from account actuals. When a voucher is entered the individual lines from that voucher are stored in the line_items table. When that voucher is posted, the amounts from the line_items table are summarized on the account_actuals table.

The amounts are summed by org_id, major_acct, minor_acct, curr_code and acct_per_date (and continuity_code if its being used by the organization).

Table LINE_ITEMS fields are: 
Li_id 
Voucher_id 
Li_origin_code 
Major_acct 
Minor_acct 
Li_amt 
Gl_sub_code 
Afe_item_num 
Dest_org_id 
Li_type_code 
Reporting_curr_amt 
Gst_amt 
Org_rep_curr_amt 
Org_rep_curr_translation_rate 
Org_rep_curr_gross_up_amt 
Li_vol 
Translation_rate 
Actvy_per_date 
Alloc_date 
Billed_date 
Afe_num 
Continuity_code 
Cash_tx_id 
Cc_num 
Etc…….. 

Table ACCOUNT_ACTUALS fields are: 
Org_id 
Major_acct 
Minor_acct 
Curr_code 
Acct_per_date 
Continuity_code 
Unadjusted_amt 
Adjusted_amt 
Adjusted_vol 
Pl_closing_amt 
Curr_restatement_amt 
Consolidating_amt 
Pl_closing_vol 
Gl_sub_code 
Adjusted_energy_val 
Pl_closing_energy_val

Anytime a voucher is posted during the year, two of the fields that the posting process populates on the account_actuals table are adjusted_amt and unadjusted_amt. 

During the P&L Closing process, all the values from net operating accounts are transferred from the adjusted_amt field to the pl_closing_amt field. 
This leaves the original amounts in the unadjusted_amt column, thus allowing us to run reports that view the data before and after P&L Close, even after the P&L Close process has been run.

The accounting month that the P&L Closing process uses for the voucher it generates is the 12th month.

POSTS THE VOUCHER TO THE General Ledger (G/L) (self posting voucher)

The amounts are added to the adjusted_amt, adjusted_vol, pl_closing_amt and pl_closing_vol in the account_actuals table.

PRINTS A REPORT DETAILING THE Profit and Loss (P&L) CLOSING ENTRY

The process generates a report that shows details of the amounts that were cleared.

The Trial Balance will now show the December balances for the net operating accounts as 0. This report is found in Qbyte Optix under Financial → Accounts → Trial Balance.

The Trial Balance Data Extract will show the Pre-closing Balance, the Closing Entry, and the Final Balance. This report is found in Qbyte Optix under Financial → Trial Balance → Trial Balance Data Extract.

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