It is essential to close entries at the end of the Fiscal year for proper management of the accounts and prepare for the new year. You need to transfer Income & expense accounts to retained earnings account. In QuickBooks, there is no fixed closing done at the end of the month and the year. However, to maintain the accounting books properly, it is essential to do a proper closing at the end of the financial year. Moreover, in QuickBooks, the data stays forever and will not be deleted until you Condense it.
If the books are not closed properly, then it gives an option to various users to go and amend it. Thus, it is essential to close entries in QuickBooks. In this blog, we will shed light on the different important aspects of QuickBooks year end closing.
QuickBooks Closing Entries means reconciling the company’s accounts. The transactions are recorded to know whether the company’s retained earning account reflect any real increase in revenues from the previous year and show lessened dividend payment and expenses.
While Retained earnings are those earnings that are not distributed amongst shareholders in the form of dividends, and are retained for further investment in sales, ad purpose, equipment, and production.
Income Summary Account is a temporary account used during Closing. The Account has a company’s revenues & expenses for the present accounting period. In short, you can say that it is through this account we get to know the ‘ Net Income ’ attained after subtracting depreciation, business expenses, taxes, debt service expense, etc.
You can use the below steps to completely close entries at the Year-end.
Accuracy in QuickBooks accounting books heavily depends on how correctly the ‘dates’ of the various transactions have been put in. If there are any discrepancies inputting the date, it can lead to inaccurate accounting books. To correct this problem, you need to carry out certain steps for QuickBooks year end closing.
Firstly, set closing date and password in the company preferences section. Here you can see your previous year info by entering the password. Once you are logged-in then:
Note: Ensure that the password entered here is not the same as the Login password.
The Audit Trail report – This report has all the file transactions, history changes, deletions, etc. If the User ID is set up for every person that enters transactions in QuickBooks, then all these effects appear in the QuickBooks Audit Trail report. You can easily find who has made what changes.
The Closing Date exception report – The report helps in fixing or locking data file to hinder users from doing any changes on or before a specific date. Hence, you easily see modifications done on or before the Closing date by referring to this report.
The Deleted Transactions Report – QuickBooks 2005 and the newer versions create an activity log for the deleted or voided transactions. In case you are looking for any such transactions, then directly refer to this report. To access this:
Double-click the Transaction, and you can see all the relevant info related to it.
The Retained Earning Quick Report – The feature is available in QuickBooks 2005 and the newer versions. The report shows the information on the various exchanges that are there on the retained earnings. To access this report:
To ensure an error-free QuickBooks year end closing, it is important to perform specific tasks during the year. We are listing some necessary steps that you should complete before QuickBooks closing entry. Ensure to perform the below tasks.
While it is important to close books efficiently, it is equally important to plan the next year. You can use some useful QuickBooks tools such as the Cash flow projector, business plan tool, budget making, etc. to efficiently plan the next year. These tools play an important role in managing accounts during the coming year and keeping everything streamlined.
That’s all for this article. Now we know the importance of adequately closing QuickBooks year end closing entries. Hopefully, the article provided you with enough information to understand all the aspects related to closing entries and their management. To get more info or resolve any doubt on the above data, directly speak to a technical expert at QuickBooks ProAdvisor support number 1-877-263-2742.
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