Generate Closing Entries

This option will generate closing entries for the income/expense and owner's draw accounts.  It is not necessary for you to manually enter closing entries for each P&L account.

Temporary closing entries may be created without doing a final closing.  This is useful if you want to be able to print financial reports in a new fiscal year.  Until closing entries have been created, financial report in the new fiscal year will be out of balance.  But by created the closing entries (without doing a final closing), your financial reports in the new year will be in balance.

A fiscal year can be left open until you have entered all adjusting entries, and then you can generate the closing entries.  (It is even possible to have multiple fiscal years open, but we don't recommend it.)

Closing entries will be generated according to the account numbers that have been entered in the Program Setup.

Go to General Ledger > Transactions > Generate Closing Entries.

Closing Date

Enter the last day of your fiscal year here.

Cash Basis Closing Entries

Note  For customers who are not using the Review Cash Basis Transactions method of cash basis accounting, this option is technically obsolete. However, it has been kept for customers that have traditionally used it in the past. For customers who are using the Review Cash Basis Transactions method, this check box will automatically be selected and should remain selected so that closing entries are moved into the Cash Basis Journal file. If Legacy cash basis features have been disabled, this check box will also be disabled.

If you have been running the Accounts Payable on an accrual basis through the fiscal year and need to convert to cash basis for tax purposes, select this box.  The program will post transactions to back out all accruals made by invoices entered in Accounts Payable as of the ending date of your fiscal year.  The accruals will be reposted on the first day of the next fiscal year.  Financial reports printed for the ending date of your fiscal year will then reflect a cash basis. 

Because transactions are posted to convert from accrual to cash basis, accrual basis G/L reports are not available (this is the main reason the feature is considered obsolete).  The preferred method is to use the Cash Basis report option when printing the Balance Sheet, Profit or Loss, and Trial Balance reports to get a cash basis report on demand.  This can be done for any accounting date, not just the ending date of the fiscal year.

Selecting this box will not make any adjustments for any accruals made by the Accounts Receivable system (another reason this option is obsolete).

This check box will also be disabled if the Accounts Payables system has been configured to run on cash basis.  That is, invoices are entered but no accruals are recorded, and expenses are booked when payables checks are issued paying the invoices.  With this method of operation, there are no accruals being posted to the general ledger, which means there are no accruals to back off at the end of the fiscal year. 

To learn more about cash basis accounting, see the topic: Cash Basis Accounting in Datatech Software.

When closing entries are generated and the Cash Basis Closing Entries check box has been selected, all cash basis transactions are moved into a closed year’s journal file.

If you need to reopen a closed fiscal year to make changes, the program will not move any new cash basis closing entries to that year’s file because it “thinks” this has already been done.

To ensure any new cash basis closing entries are moved into a closed year’s journal file, follow these steps:

  1. Go to Tools > Program Setup > General Ledger > Settings and change the Date Last Closed entry to 12/01 of the closed year in which you need to make changes. For example, if you need to make changes to 2024 and the date last closed is 12/31/2024, change it to 12/01/2024.

  1. Go to General Ledger > Transactions > Review Cash Basis Transactions.

  2. Right-click on any transaction and then select Generate Transactions from the pop-up menu.

  3. After the transactions have been regenerated, go back to Tools > Program Setup > General Ledger > Settings and change the Date Last Closed entry to the original closing date.

Final Closing

If this box is selected, then after the closing entries have been generated, the last date closed will be updated in the system file.  This will prevent any transactions being posted to the prior fiscal year.

Generate

Click Generate to generate closing entries.