Close Cycle

General Ledger cycles represent either twelve (12) monthly or thirteen (13) custom periods (plus one adjustment cycle). Journal entries are always assigned to a cycle and fiscal year. When all journal entries have been made to a particular cycle and no further entries will be necessary, that cycle should be closed. Cycles must be closed in sequential order beginning with the oldest open cycle. Once a cycle has been closed, no further entries for that cycle will be allowed.

Closing the Year (Adjustment Cycle)

Leave the "adjustment" cycle of the fiscal year open until you have received and completed (posted) all year-end adjustments from your accountant. In addition, you shouldn't close this final cycle until after your accountant has reviewed and accepted any financial statements you have provided to them. There is no "undo" if you accidentally close a cycle other than a complete restore of the database (that would minimally require re-entry of all activity for the day if noticed immediately).

Once the final adjustment cycle is closed, the beginning balances of all income and expense type accounts (P & L accounts) are cleared to zero for the new year. This is done for all accounts except for the balance sheet accounts which include assets, liabilities, and owner's equity types (aka. "retained earnings"). This is the only automatic adjustment.

Some companies prefer to move the balance of retained earnings to a "prior year" account. This is usually done after closing the fiscal year (by closing the adjustment cycle) so that financial statements for that year are not affected by the move. This is not done automatically, and not all companies do this.

Cycles are not closed automatically and can remain open for months and even years (although this is not suggested). This gives a company time to make adjustments and verify posted amounts prior to closing a cycle. Eventually, if you have not closed any cycles in a long enough time (2+ years), posting journals won't be allowed until some cycles are closed.

Close_Clycle_GL1

When a cycle is available for closing, this screen will display the oldest open cycle that's available to be closed. All entries for that cycle must be posted before a cycle can be closed. If open entries (not posted) for the cycle exist, the cycle cannot be closed.

To close the cycle, press F12 (Process). A confirmation prompt is provided allowing you to cancel if you accidentally chose Process (F12).

Close_Cycle_GL_Confirm

In some cases, there may be a reason that the cycle cannot be closed. Not yet transferred payables and open journals for the cycle are the primary reasons this might happen. If this is the case, message boxes appear explaining why the cycle may not be closed (see the example below).

Close_Cycle_GL2

Note: messages regarding why a cycle may not be closed are not application errors (problems with the software), they are just a message telling the user what needs to be done before the cycle can be closed.