We’ve made it to the end of the year, and as the holidays rapidly approach, it’s year-end closing time for calendar year businesses. If you’re a Microsoft Dynamics GP user who needs help understanding the processes and procedures in closing, we invite you to learn more below. If you are looking to make this process easier, Wipfli recently presented a webinar on completing this process that offers tips and tricks on making it easier (contact us for more information). Today, as we follow up our blogs on the updates that were made for GP platforms still under mainstream support, we would today like to turn our attention to the closing procedures.
Closing the Year in Dynamics GP
The Microsoft Dynamics GP Closing process is a fourteen-step process that needs to be followed in a specific order to reduce the likelihood that you receive an error. These 14 steps (from KB 888003) are as follows:
Step 1: Complete the posting procedures and the closing procedures for other modules (Only necessary if GL is Integrated with other Modules)
In this step, post final transactions in all modules except for GL, complete month-end and quarter-end procedures for all modules except for GL, and complete year-end closing for each module in the following order:
- Inventory (See Knowledge Base Article 872713)
- Receivables Management (See Knowledge Base Article 857444)
- Payables Management (See Knowledge Base Article 875169)
- Fixed Asset Management (See Knowledge Base Article 865653)
- Analytical Accounting (See Knowledge Base Article 960356)
Additionally, if using payroll, this process is run independently of other modules. See Knowledge Base Article 850663 for more information.
Step 2: Post the Final Adjusting Entries in General Ledger
In closing out the year, correct any errors made when transactions were processed using adjusting entries. If you must make any adjusting entries to allocate revenue, expenses, or depreciation to the year that you are closing, use the Transaction Entry window or the Quick Journal Entry window to make adjusting entries in General Ledger.
In the event that you have to track initial adjusting entries or postaudit entries separately from other fiscal periods, auditing periods can be set up in GL. For more information on setting up adjusting periods, please view Knowledge Base Article 871679.
Step 3: Print an Account List to Verify the Posting Type of Each Account
To determine whether the account is closed to the retained earnings account or brought forward to the next fiscal year, print an account list in the Reports menu. For accounts being brought forth to the coming year, the posting type will be set to Balance Sheet and those being closed will be set to Profit and Loss in the Account Maintenance window.
To print an account list, complete the following steps:
- On the Reportsmenu, point to Financial, and then click Account.
- In the Reportslist, select All Accounts, and then click New.
- In the Optionbox, type all accounts.
- Click to select the Inactive Accountscheck box.
- Click Destinationto specify a report destination, and then click OK.
- Click Print.
Step 4: Close the Last Period of the Fiscal Year (Optional)
In order to prevent transactions from being posted to the wrong period or year, it is recommended but optional to use the Fiscal Periods Setup to close out all fiscal periods that are still open.
Step 5: Perform File Maintenance on the Financial Series Group of Modules (Optional)
Another optional step, this is completed by running the check links procedure on the Financial series group of modules.
Step 6: Verify the Settings in the General Ledger Setup Window
There are reasons you want to keep historical records, and if you choose to do so, you need to make sure the “accounts” and “transactions” checkboxes are checked in the “maintain history” area of the GL Setup window.
If these boxes are checked, you will have the option in the future to print financial statements and calculated budgets from historical information, as well as view transaction details. Further, if these check boxes are selected, both the account history and the transaction history are updated during the year-end closing routine.
Step 7: Make a Backup
Before starting the final closing procedure, make a backup of all company data and put it in safe permanent data. The importance of this can’t be understated—if any error occurs, this will be the first place you turn. If an error occurs, do not hesitate to contact our support team for assistance.
Step 8: Print a Final Detailed Trial Balance Report
Before finalizing the close, print a final year-end Detailed Trial Balance report. It is recommended you post all transactions for all modules before printing this report.
Step 9: Print the Year-End Financial Statements
Another important step to maintain your records, please print any necessary financial statements. The most common financial statements to be printed are Balance Sheet, Profit and Loss Statement, Statement of Cash Flows, and Statement of Retained Earnings.
Step 10: Set Up a New Fiscal Year
In the final step before closing the current year, you need to set up a new fiscal year. This is completed in the Fiscal Periods Setup Window.
Step 11: Close the Fiscal Year
Now, you’ve made it to the close. With other modules closed, backups made, users logged out, and reports printed, complete the following steps to close out the year.
- On the Microsoft Dynamics GP Menu, click Tools, Routines, Financial, Year-End Closing
- Specify which account you want retained earnings to be posted. This will default to the account you specify in the General Ledger Setup window and will represent the account to which profit and loss are posted. Alternatively, you could split this among accounts by setting up an allocation account to distribute earnings. Follow Knowledge Base article 850615 to learn how this is done.
- Specify the number you want to use as the first journal entry for the coming fiscal year. If this is not specified, the default number is one more than the highest journal entry number for the current year.
- Click Close Year. Click this button only once. Please note that the process may hesitate around 50 Percent. If this happens, ignore it. Do not restart the routine.
When the year-end closing routine is complete, the Year-End Closing report is printed. This report lists the accounts that were closed and the transactions that were created to close those accounts. The Year-End Closing report is part of the audit trail. Save this report for the company’s permanent records. The Year-End Closing report cannot be reprinted.
Notes on Maintaining Account and Transaction History
If you are maintaining account and transactions history (step 6), the closing process will complete the following:
- If you are maintaining the account history, the year-end closing routine transfers all current-year information for each account in the chart of accounts to the account history.
- If you are maintaining the transaction history, the year-end closing routine also transfers all current-year information for each account in the chart of accounts to the transaction history.
Additionally, in closing the year, GP completes the following:
- The year-end closing routine reconciles and summarizes the general ledger balances that accumulated throughout the year.
- The year-end closing routine removes accounts that are marked as inactive if the accounts match the criteria for deleting a posting account. Inactive accounts that have been set up as budget accounts can also be deleted if they have no activity for the year. These accounts can be deleted even if budget amounts from past years are associated with these accounts.
- The year-end closing routine moves all profit and loss account balances to the retained earnings account.
- The year-end closing routine summarizes balance sheet accounts and brings the balances forward as the beginning balances of the account in the new fiscal year.
- The year-end closing routine prints the Year-End Closing report.
Step 12: Close All the Fiscal Periods for All the Series (Optional)
Following the close, you may use the Fiscal Periods Setup window to mark the periods for all series as closed. While optional, Microsoft recommends you complete this to prevent a module from posting a transaction to a closed period.
By marking these as closed, it prevents transactions from posting. If you need to post a transaction to a closed period, return to the Fiscal Periods Setup window to reopen said period.
Step 13: Adjust the Budget Figures for the New Year, and Then Print the Financial Statements
With the year closed, you now may adjust budget figures for the new year in either Excel-based budgeting, Budget Maintenance, or Single-Account Budget Maintenance.
Step 14: Make a Backup
After books are closed and budget figures set for the new year, make another backup.
Questions? Need Assistance? Contact Us Today!
At Wipfli, we’ve been in the business of supporting Microsoft Dynamics GP for years, and have helped companies like yours to ensure a speedy, accurate, and hassle-free close. In tomorrow’s blog, we will cover additional tips and answer other commonly asked questions, but if you don’t have time to read that one and you take one thing from this blog, let it be this: Make backups. We can’t stress that enough.
If there are any close issues, please contact firstname.lastname@example.org immediately to resolve questions or concerns.