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Year-end closing refers to all control operations, adjustments, and time delimitations carried out at the end of the year, before preparing the final financial statements.
With Banana Accounting, each accounting year has its own separate file. Technically, there is no concept of a formal accounting closure:
- When a new year begins, a new file is created using the Create new year command.
- You can continue working simultaneously on both the new year’s file and the previous year’s file. Once the closing operations are completed, the updated balances are retrieved in the new year's file using the Update opening balances command.
On these pages, we explain the main steps to follow during the accounting year-end closing phase:
Year-end checklist
The year-end checklist reminds you of all the steps needed to correctly close the fiscal year: preliminary checks, adjustments, corrections, and tax reviews.
Closing transactions
The closing transactions are accounting records made at the end of the fiscal year such as adjustments, depreciations, settlements, and corrections that complete the annual financial statements.
Allocation of profit/loss for the year
During the creation of the new year, the program automatically carries forward the profit or loss of the previous year and allows you to allocate it to one or more balance sheet accounts.
The opening balances are updated consistently, ensuring accounting balance.
The allocation can also be postponed and done later.
Distribution of annual profit
The distribution of annual profit defines how the year's positive result is allocated among reserves, dividends, or equity, according to legal and statutory requirements. It is an operation that is carried out after the approval of the financial statements and requires specific transactions.
Documents for the Auditor
The documentation for the auditor lists the documents needed to facilitate and speed up the auditor’s work. It includes account statements, contracts, inventories, supporting documents, reconciliations, and reports.
Changes after closing
Changes after closure may become necessary in case of errors identified later, documents received late, or adjustments requested during the audit. Depending on their nature, the changes must be recorded either in the closed year or in the following one.