Closing out fiscal year
by Toni Oliver
How and when do you close out your fiscal year?
First things to do at year-end are to reconcile your bank accounts, inventory, receivables, and any loan payable accounts to your year-end statements.
If you're using a computerized accounting system, you should print out to keep various accounting reports - at least a General Ledger for the year, an Accounts Receivable Aging, Payroll Summaries if you have employees, and a Balance Sheet and Income Statement.
The software will "close" out the year for you, which means that it will close all your Revenue and Expense accounts into your Equity (or Capital) account.
If you're using a manual General Ledger, you can do an entry in each Revenue and Expense account to reduce the balance to zero. Label the entries "year-end close". Your entry won't balance. Take the amount you have left over after adding your Debit entries and subtracting your Credit entries, and post that amount to your Owner's Equity account. Or, if you're a corporation, to Retained Earnings.
Does that help?