Industry Chart of Accounts
Assets
Liabilities
Equity
Investments
Year-end
Your online accounting file is a multi-year file so there isn’t a closing off like there is in some other accounting packages. You can lock the transactions in your file up to this date but your transactions aren’t purged, as happens in some software. Removing your transactions doesn’t allow you to monitor your business or investment performance effectively over several years. It also doesn’t allow you to maintain a high quality asset register or depreciation records.
Saasu’s reports are sensitive to the dates you run them for. If you run a Profit and Loss report for a financial year, the transactions for income accounts prior to that year aren’t included. So, in effect, we don’t need to purge them from the system.
The year-end process is greatly simplified in an online accounting application. At the end of the year your accountant can help you with closing entries specific to your business (if you are unfamiliar with the process).
Some Examples of Year-end Entries
- Depreciation using journal entries – See Depreciation of Assets.
- Moving current earnings to retained earnings for a company using a journal entry – See
Moving Current Earnings to Retained Earnings at Year-end. - Accrual of income or expenses not yet earned or expended.
- Write-offs of bad debts – See Writing off a Sale.
- Accretion of assets that have changed in value.
Current Earnings to Retained Earnings at Year-end
The easiest way to move your current earnings to your retained earnings is to enter a journal transaction as each financial year is completed.
In Saasu, there is a built-in equity account called Current Earnings. This account is the balancing item for the Balance Sheet report. At present you can’t post to this account so you need to create another account to offset it.
Typically at year-end, your accountant would clear this account once all the checks and balances have been completed and they are ready to prepare the financial statements for your organisation.
- If you haven’t already created an Earnings account, create two accounts as follows:
- Equity: Current Earnings.
- Equity: Retained Earning.
- Select Add > Journal.
- Date the transaction to the first day of your new financial year.
- Use the Balance Sheet or Profit and Loss reports as at the last day of the financial year to get your earnings number for the year. For example, $1,500 of retained earnings (profit) relating to this financial year needs to be cleared from the Equity: Current Earnings (My Profit) account:
Account Debit Credit Equity: Current Earnings $1,500 Equity: Retained Earnings $1,500 - Save the transaction.
The resulting Balance Sheet Report would look like this:
| Account | Amount | Notes |
|---|---|---|
| Equity: Current Earnings (My Profit) | 1,500 | These two accounts will be merged in a future release. |
| Equity: Current Earnings | -1,500 | |
| Equity: Retained Earnings | 1,500 | Prior year earnings |
Current Earnings to Retained Earnings clearing all GL accounts method.
You can clear all the General Ledger P&L accounts at year end with a Journal that moves the balances to Retained Earnings. Instead of the above Journal you would post each Income, Expense and Cost of Sales account (all non-balance sheet accounts) to the Retained Earnings account.
When importing from other accounting systems for multiple years then the year end process hasn’t been followed above so balances will be carrying forward. To get GL opening balances to clear it requires a Journal entry at the end of each year to clear the accounts and move the P&L result to Retained Earnings in the Balance Sheet.
TIP: We recommend not loading historical data for multiple years unless you plan to balance each year end again against your filed accounts and thus do closing journals described above as though you are closing off the books again for each year of data.
Payable Reconciliation
Checking your Payables numbers in a report against your balance sheet is a good way to check for errors in your accounting file regarding the purchases and other transaction types you have entered.
Accounts Payables report totals generally match the Balance Sheet total for this account. The reports need to be run with the same date to do this check. If they don’t, it is usually caused by one of the reasons discussed below.
You have entered an opening balance for the Payables
Then it may also be out by this amount. That is, if you entered an opening balance instead of entering each unpaid purchase at the time you changed over your accounting system to Saasu.
Transactions such as Journals have been coded to your Payables account
If you code transactions to the Liability: Accounts Payables your balance sheet will be out by these amounts. Sometimes customers think they need to code a Purchase to Accounts Payable, but they don’t as Saasu does this entry. The Purchase should be coded straight to the Cost of Sales or Expense account for which it was intended.
Report Dates don’t match
The date range is different in the reports you are comparing.
Payments pre-dating Purchase Invoice date
If you make a deposit payment that is dated before the report date but you then date the Purchase Invoice after the report date you will have the situation where Saasu has money posted to Account Payable on the Payment Date but there is no offsetting entry in the Balance Sheet for Accounts Payable because the Purchase Invoice is dated after the report date.
Troubleshooting differences between Balance Sheet Payables and Aged Payables
It’s a good idea if the above fails to narrow down the problem by checking each month from the beginning of your file. Do a month at a time until you find the month that doesn’t match. Your issue will then be in that month period and should be easier to find.
Reporting in Multi-year Files
When you want to run a report for a financial year, choose the date range for the relevant period using the filters provided. Here are some examples:
- Profit and loss for an organisation balancing Dec 31st each year would use the date range in the filter for the report of Jan 1st to Dec 31st.
- For this same organisation, the Balance Sheet report for the end of Dec 31 financial year for the date filter.
