How to close a fiscal year and how to transfer income statement balances to a balance sheet in Microsoft Dynamics NAV

Applies to: Microsoft Dynamics NAV 5.0

Microsoft Business Solutions-Navision 4.0 and Microsoft Navision 4.0 are now part of Microsoft Dynamics NAV 4.0. All references to Microsoft Business Solutions-Navision or to Microsoft Navision 4.0 relate to Microsoft Dynamics NAV.

INTRODUCTION


This article describes how to close a fiscal year and how to transfer income statement balances to a balance sheet in Microsoft Dynamics NAV and in Microsoft Business Solutions - Navision.

More Information


How to close a fiscal year

  1. Click Financial Management, expand General Ledger, expand Periodic Activities, expand Fiscal Year, and then click Accounting Periods.
  2. In the Accounting Periods dialog box, click Close Year.
  3. When you are prompted to close a fiscal year, make sure that you want to close the fiscal year, and then click Yes. The check boxes for all the periods in this fiscal year are selected in the Closed area and in the Date Locked area.

    Note After you close the fiscal year, you cannot click to clear these check boxes. Additionally, you cannot change the periods of the fiscal year.

How to transfer income statement balances to a balance sheet

To transfer income statement balances to a balance sheet, run the Close Income Statement process. This process creates the lines of the journal entry. Then, the closed Income Statement account balance becomes zero, and the net income and the net loss are posted to the retained earnings account in the balance sheet.

To transfer income statement balances to a balance sheet, follow these steps:
  1. Click Financial Management, expand General Ledger, expand Periodic Activities, expand Fiscal Year, and then click Close Income Statement.
  2. In the Close Income Statement dialog box, type a date in the Fiscal Year Ending Date field, and then enter a value in the following fields:

    • Gen. Journal Template
    • Gen. Journal Batch
    • Document No
  3. In the Close Income Statement dialog box, enter a value in the following fields if a value is required:
    • Posting Description
    • Retained Earnings ACC

      Notes
      • The result of the Close Income Statement process depends on the value in the Additional Reporting Currency field in the General Ledger Setup dialog box.
      • If you specify an additional reporting currency for a company, Microsoft Dynamics NAV posts the entry directly instead of by using a journal template and a journal batch. Therefore, you have to enter a value in the Retained Earnings ACC field. Then, during the posting process, the closing entry will not use a currency translation of the closing amount as the additional reporting currency.
      • If you specify the additional reporting currency for a company, you must remove the dimension value posting rules of the retained earnings account. If you do not remove these rules, you may receive the following error message when you run the Close Income Statement process:
        A dimension used in Gen. Journal Line GENERAL, DEFAULT, Number has caused an error. Select Dimension value Code Number for the Dimension Code Code_Number for G/L Account Account_Number.
      • If you do not specify an additional reporting currency for a company, Microsoft Dynamics NAV creates an entry in the general journal template and an entry in the general journal batch that you specified. If you enter a value in the Retained Earnings ACC field, the journal lines will contain a fully balanced closing entry. If you do not enter a value in the Retained Earnings ACC field, you have to enter a retained earnings account or an equity account on the last line of the journal. You must post the net income or the net loss to the retained earnings account or to the equity account. The closing entry will be posted by using the following special date:
        CMM/DD/YYYY
        The letter "C" indicates that the date is used for a closing entry. The letter "C" also indicates that the date is used between the ending of the closed fiscal year and the beginning of the next fiscal year.
  4. In the Close Income Statement dialog box, click to select the Business Unit Code check box under Close By if you want.

    Note





    If the company is a parent company that is used in a consolidation, you must click to select the Business Unit Code check box. Then, the closing entry is created separately for each company.
  5. In the Close Income Statement dialog box, click the lookup button in the Dimensions field under Close By. Then, click to select the check box for the dimension that you want to use, and then click OK.

    Notes
    • If you want to create a closing entry for each combination of account numbers and of dimension values that are posted, you must enter a value in the Dimensions field.
    • We recommend that you enter a value in the Dimensions field. If you do not enter a value in the Dimensions field, the retained earnings account balance will not be posted by dimensions. Therefore, you may have to process a separate reclassification entry.
    • If an adjustment to an income statement account occurs after the Close Income Statement process is complete, you can run the Close Income Statement process again. Microsoft Dynamics NAV will create a journal entry for the change in the income statement account. Microsoft Dynamics NAV will post the remaining amount to the retained earnings account. If the Business Unit Code check box is not selected or if the Dimensions field does not contain a value, you may have to run the Close Income Statement process again. Then, Microsoft Dynamics NAV will create entries that reverse the original closing entries. Additionally, Microsoft Dynamics NAV will create the replacement closing entries that include the business unit codes and the dimensions.
  6. Click OK.