Preparing for Year-End on Microsoft Dynamics NAV
Does the thought of closing your books on Microsoft Dynamics instill you with fear and trepidation? It doesn’t have to be that way. First, we’re here to help. Second, there are many simple steps you can take to prepare. Lastly, there’s plenty of guidance available from Microsoft should you encounter any difficulty.
Whether your year-end is December, as most of our clients or June like some of our clients, the steps for preparing to close are the same.
Basic Prep Steps
All you really need to do in preparation for closing your books for a fiscal year or period is to ensure that all your accounts are up-to-date and that you’ve allocated all costs and income.
There are many standard reports that you can use to verify the accuracy of the accounts.
For example, you can use the “Customer - Trial Balance” report to verify that the balance for a customer posting group is equal to the balance on the corresponding general ledger account on a certain date. The following is a list of reports that you can run ahead of your close.
In order to
Use this report
Print a detailed trial balance report for one or more bank accounts with additional information about individual entries.
Bank Acc. - Detail Trial Bal.
Print a detailed trial balance for selected customers.
Customer - Trial Balance
Print a detail trial balance with detailed information about individual entries for selected customers during a chosen period.
Customer - Detail Trial Bal.
Print a detailed trial balance for selected vendors.
Vendor - Trial Balance
Print a detail trial balance with detailed information about individual entries for selected vendors during a chosen period.
Vendor - Detail Trial Balance
Print a trial balance with the current year's and the previous year's figures.
Closing Trial Balance
Print a detailed trial balance report for general ledger account balances.
Detail Trial Balance
Print a trial balance report with balances and net changes for general ledger accounts.
Print a trial balance for a consolidated company.
Consolidated Trial Balance
Now you’re ready to close your books!
The Closing Process
The process for closing your books includes these four main tasks:
1. Closing the accounting period
A fiscal year is defined as one or more open periods, as outlined in the “Accounting Periods” window, typically 12 periods of one month each.
2. Registering prior-year entries
When you close a fiscal year, you must enter several administrative transactions called adjusting entries, for example, prepaid and accrued items. Like most other entries, adjusting entries contain a checkmark in the “Prior-Year Entry” field if they are posted on a date in a closed fiscal year.
3. Transferring balances from the income statement accounts to the balance sheet
After a fiscal year has been closed and all prior-year entries have been posted, the income statement accounts must be closed and the net income for the year must be transferred to an account under owners' equity on the balance sheet. You can use the “Close Income Statement” batch job to do this.
The batch job processes all general ledger accounts of the Income Statement type and creates entries that reverse their balances. These entries are placed in a journal from which they can be posted.
4. Posting the year-end closing entry along with the offsetting equity account entries
Once the “Close Income Statement” batch job has run, you can post the entries. If you did not specify a retained earnings account in the batch job, then you must enter one line with a balancing entry that posts the net income to the correct general ledger account under owners' equity on the balance sheet. Now you can post the journal.
And you’re all set…until next year!
Closing Your Books on Microsoft Dynamics 365 Business Central
If you’re closing your books on Microsoft Dynamics 365 Business Central, the concepts are the same, of course. And many of the steps are the same, too. Microsoft has done a fantastic job of outlining everything for you.
Start here with an overview of Closing Years and Periods:
Then check out the most up-to-date information under these headings:
The material above is pretty comprehensive. But don’t be shy. If you’ve…