How to close the Fiscal Year

How to Close the Fiscal Year

Closing the Fiscal year in Odoo means, transferring your current year's unallocated earnings to your retained earnings

Before going ahead with closing a fiscal year, there are few steps one should typically take to ensure that your accounting is correct, up to date, and accurate:

*  Make sure you have fully reconciled your bank account(s) up to year-end and confirm that your ending book balances agree with your bank statement balances.
*  Verify that all customer invoices have been entered and approved.
*  Confirm that you have entered and agreed on all vendor bills.
*  Validate all expenses, ensuring their accuracy.
*  Corroborate that all received payments have been entered and recorded accurately.
*  Ensure that all the audit journals have been entered.

Year-end checklist

*  Reconcile all accounts on your Balance Sheet: 
i) Agree your bank balances in Odoo against your actual bank balances on your statements. Utilize the Bank Reconciliation report to assist with this. 
ii) Reconcile all transactions in your cash and bank accounts by running your Aged Receivables and Aged Payables reports. 
iii) Audit your accounts, being sure to fully understand the transactions affecting them and the nature of the transactions, making sure to include loans and fixed assets.

 *  Validate any open Vendor Bills and Customer Invoices with their payments. 
 *  Your accountant/bookkeeper will likely verify your balance sheet items and book entries for: 
     > Year-end manual adjustments. 
     > Depreciation Journal Entries. 
     > Loans. 
     > Tax adjustments. 

Closing the fiscal year - Journal entry to allocate the Current Year's Earnings                         

1. Go to Accounting > Reporting > Balance Sheet 


2. Set the date to the End of Last Financial Year. 



* Note down the Current Year Unallocated earnings       

                                                                                                          
3. Create a journal to allocate the Current Year Unallocated Earnings to Retained Earnings, follow the below steps,
    * Go to Accounting > Journal Entries 

 
        * Click on CREATE

• Add Reference and Original Invoice Date for the journal entry. Keep the Journal type as Miscellaneous Operations
• Add Accounting date
• Click on Add a line
• Account - Select 3900 Current Year Earnings account and add Label( Please note that the account type of this account should be " Current Year Earnings"). Record the unallocated amount under debit or credit based on your profit/loss.
  Eg: If it is a profit, Debit Current Year Earnings, and Credit Retained Earnings. 
• Then, select Retained Earnings account and add Label. Add the amount under Debit or credit as per your current year's earnings.
  Eg: If it is a loss, Debit Retained Earnings and Credit Current Year Earnings 
• Click on POST to post the journal entry.
                                                                                                                                                     

4. Once you go back and view the balance sheet, you will see that the current year's unallocated balance has been changed to 0 and the retained earnings are updated accordingly. 

5. Once the above journal entry is done, Go to Accounting > Lock Dates and Lock Date for All Users and click on SAVE.