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Accounts, Period End

To run a “Period End”, starting from the “Accounts Menu”…

  • Click the “Period End” button
  • Click the “Period End” tab
  • Select the month (e.g. the last month of your financial year)
  • Enter the year
  • Click the “OK” button
  • What is a Period End?

    Typically a “Period End” occurs at the end of a financial year (though some organisations submit their accounts on a quarterly or monthly basis, so this procedure has to be a “Period End” rather than a “Year End”), when you’ll want…

  • to submit your accounts to your auditor, and hence need to fix your old period’s data to prevent further changes
  • to prepare your system for the start of the new financial year, with an empty set of nominal accounts
  • This is exactly what occurs when you click the “OK” button on the “Period End” tab, as shown above. After doing so no further changes will be allowed to invoices, journals or cashbook reconciliations prior to this date, and if the specified period end is also on or after a financial year end (see “Accounts, Set-up Financial Year & Extra Years” ) then the system also automatically moves all of the old year’s nominal account totals into a single control account called “Profit or Loss Brought Forward”. This is done via a number of automated journals, as illustrated below. The “P&L B/F” control will then contain their net value (i.e. the total of all the old year’s sales minus the total of its purchases), and the nominal account totals for the current year will then only contain sales and purchases for the current year.

    When to Run a Period End

    In practice it is almost impossible to run a “Period End” immediately the old period has ended because some purchase invoices will still be in the post. So almost every “Period End” procedure will be run retrospectively after all invoices for the year in question have been sent and received. It does no harm to wait a while, though you don’t want to leave it too long as your nominal account totals will continue to include the previous year’s values until you’ve run it. As a minimum, you ought to run a “Period End” a month or two after each financial year-end. You are advised not to run “Period Ends” more frequently than this unless you have a specific reason to do so.

    Don’t worry about running a Period End twice by mistake. Unless you change the “Period End” date the second time will have no affect whatsoever.

    Locking Old Data

    To some extent a “Period End” is similar to the “Lock Down” procedure (see “Accounts, Period End, Lock Down”) except that it cannot be undone, so you should only undertake a “Period End” when you are certain that all of your accounting for the period in question is complete and accurate. So prior to a “Period End” you should…

    1. Reconcile all of your Bankbooks so they exactly match your real life bank statements up to the date of the period end
    2. In the Cashbook, use the “Signpost” button’s option to set a “Filter” to check for any un-banked or un-reconciled transactions before the date of the period end. It is quite likely that such transactions really should be un-reconciled or un-banked, but ensure that this is the case rather than that you’ve simply forgotten to finish them off.
    3. In the Sales Ledger, use the “Signpost” button’s option to set a “Filter” to only show un-reconciled items, then use the “Binoculars” button to sort them by date. Check that all un-reconciled items preceding the date of the period end really should be in the Ledger. Use the “Bin” button to delete all mistaken or duplicated entries. Repeat this process in the Purchase Ledger.

    Profit or Loss Brought Forward

    The other thing that happens when you run a “Period End” after a financial year-end is that the system automatically produces a journal entry between each sales nominal account and the “Profit or Loss Brought Forward)” control, then does the same for each purchase nominal, as illustrated above. These journal entries cannot subsequently be edited or deleted. The “Profit or Loss Brought Forward” control is thus automatically adjusted in line with the net difference between all the sales and purchase nominals at each year-end. This is required to keep the bank and control accounts in balance after the year-end when the sales and purchase nominals get reset to zero. Consider the following…

    END OF YEAR 1

    Debit

    Credit

    Bank & Control Accounts

    Debtors

    7000

    Creditors

    1000

    Profit & Loss B/F

    0

    (first year so no P&L brought forward)

    Sales & Purchase Accounts

    Sales

    7000

    (net profit for year = 7000-1000 = 6000)

    Purchases

    1000

    START OF YEAR 2

     

    Debit

    Credit

    Bank & Control Accounts

    Debtors

    7000

    Creditors

    1000

    Profit & Loss B/F

    6000

    (profit brought forward)

    Sales & Purchase Accounts

    Sales

    0

    (nominals set to zero for new year)

    Purchases

    0