Ax2009 Enus Finii 10

Chapter 10: Year-End Close

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CHAPTER 10: YEAR-END CLOSE Objectives

The objectives are

• Create a new fiscal year • Control transactions in a closing period • Stop or close a period • Create a closing sheet • Make adjustments or transfers between accounts • Transfer opening balances • Set up fiscal year close parameters

Introduction At year-end, it is always necessary to:

• Make adjustment entries that reflect transactions from the previous year.

• Print reports, including financial statements. • Back up data. • Create a new fiscal year and transfer opening balances.

Fiscal Year-End Tasks

The following list assists in closing a fiscal year in Microsoft Dynamics® AX 2009.

• Create a new fiscal year. • Set the appropriate periods to Stopped in the fiscal year being closed

to prevent any accidental postings. • Open the year-end closing period in the fiscal year being closed to

enable posting of any necessary closing entries. • Make any adjusting entries by using either the closing sheet or by

using the general journal. • Print final financial statements.

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Financials II in Microsoft Dynamics® AX 2009

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• Print 1099s for any vendor that requires a 1099 statement. • Back up data. • Transfer opening balances into the new fiscal year either

automatically or manually. Check the related General Ledger parameters before the transfer.

• Reset number sequences. This is an optional step, and not recommended unless required by local authorities.

NOTE: If you use the Inventory module, run the Inventory Close process through the end of the fiscal year. For more information about this process, refer to the Trade and Logistics training material.

Create a New Fiscal Year When you create a new fiscal year:

• The first step in the year-end closing process is to create a new fiscal year.

• Create it before you close the prior year because the year-end close usually does not occur immediately.

• Immediately after you create it, you can enter transactions. The previous year does not have to be closed before you can enter the next year's transactions.

Procedure: Create a New Fiscal Year

Follow these steps to create a new fiscal year.

1. Click General ledger, click Setup, click Periods, and then click Periods.

2. Click the Create new fiscal year button. 3. Enter the start date of the company fiscal year and the closing date of

the fiscal year.



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4. Define the length of each accounting period. The options include the following: • Days • Months • Years

Depending on the structure of the company's operations, you may have to divide a period to obtain the required periods. Creating, deleting, and dividing fiscal periods is discussed in detail in the Financials I collection.

5. Click OK.

FIGURE 10.1 CREATE NEW FISCAL YEAR FORM

Test Your Knowledge

1. Put in order the steps required to create a new fiscal year.

Step:

_____: Enter start of the fiscal year

_____: Click OK

_____: Click General ledger, click Setup, click Periods, and then click Periods

_____: Enter the desired length of the period

_____: Enter the Unit

_____: Click the Create new fiscal year button

_____: Enter close of the fiscal year



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Control Transactions in a Closing Period When you create a new fiscal year, you may have to control or stop transactions from updating the ledger accounts during the closing process.

To stop transactions:

• Set the period or periods to stopped. o This differs from setting it to closed, because you can reopen a

stopped period, but you cannot reopen a closed period.

When a period is closed, the system displays a warning message that requires a confirmation to indicate the period actually should be closed because the action is irreversible.

CAUTION: A closed period cannot be reopened. Therefore, permission to close periods and years should be highly restricted.

Procedure: Stop or Close a Period

Follow these steps to stop or close a period.


2. Click the period to edit, and then click the Status arrow. 3. Select either Stopped or Closed in the Status field. By setting a

prior period to stopped, no additional postings can occur in that period. Because you cannot reopen a closed period, set periods to stopped instead of closed.

FIGURE 10.2 PERIODS FORM



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Procedure: Change a Module Status in a Period

Frequently, a company may want to close all the modules, except for the General Ledger during the closing process. They often only allow for specific user groups to enter transactions and leave the period open.

Use the Module status tab to control who can post transactions, but not stop the period.

Follow these steps to change a module status in a period.


2. Click the period to edit, and then click the Module status tab. 3. In the Module status field, select from the following:

• None - Denies everyone access to each selected module • User Group - Gives access to a specific user group

FIGURE 10.3 PERIODS FORM, MODULE STATUS TAB



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Test Your Knowledge

1. What is the difference between a stopped period and a closed period?

2. Is it possible to restrict user access to the application during the closing process, and if so, how?

Create and Post a Closing Sheet The company may print a trial balance sheet to look for inconsistencies and make any adjustments necessary before closing the period. To make adjustments in Microsoft Dynamics AX 2009, either:

• Make typical journal entries, depending on adjustment • Use the Closing Sheet

When you use the Closing Sheet:

• It shows an advanced view of the balances on accounts, and you can perform year-end postings directly from it.

• The postings to it typically occur in the closing period of the fiscal year.



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• You can create several specific closing sheets (for revenue, expenses, balance accounts, and so on) and then load the balances from the General Ledger into the closing sheet by using the Accounts button. After you load the transactions, make transfers from one account to another.

• It resembles a journal because you can create as many new closing sheets as needed and you can post several lines of entries.

Procedure: Create a Closing Sheet

Follow these steps to create a closing sheet.

1. Click General ledger, click Periodic, click Fiscal year close, and then click Closing sheet.

2. Press CTRL+N to create a new record. 3. Give the closing sheet a unique identifier in the Closing sheet field,

and a Name. 4. Select the Posting layer that the closing sheet is used for. The

following options are available: • Current - Ordinary transactions/adjustments. Most frequently,

the Current posting layer is used. • Operations - Extraordinary transactions/adjustments. • Tax - Used to make adjustments necessary for the tax posting

layer reporting. This field is for information purposes only.

5. Select a Period code from the following options: • Normal • Closing • Opening



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You can use only two of them, Normal and Closing, in the Closing Sheet. You cannot make transactions to the Opening period in a closing sheet; use the Opening option only for a beginning balance transaction. This is discussed later in this course. You can make adjustments, however, to the regular period(s) and to the closing period(s). Usually this field is set to Closing.

FIGURE 10.4 CLOSE FORM

Procedure: Create a Closing Sheet - Define Dates

Follow these steps to enter date ranges for the closing sheet.

1. From the Close form, click the General tab. 2. Enter the start date of the fiscal year closing in the From field and

the end date of the fiscal year in the To field. 3. Enter the Post date of the transaction.

Procedure: Create a Closing Sheet - Load Balances

Follow these steps to load the account balances into the closing sheet.

1. From the Close form, click the Closing accounts button. 2. Click the Load balances button to identify the accounts to include.

When balances load from a company, Microsoft Dynamics AX 2009 totals all the transactions in each account.

3. Select the Delete existing accounts check box if balances already are transferred into this worksheet and to delete those and reload balances. If the closing sheet is a new sheet, do not select this option.



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4. Click the Select button to select specific ledger accounts, such as all Payables or all Receivables, and to open the standard query window to specify the search criteria.

5. Click OK when you select the ledger accounts to transfer into the worksheet. A form displays the progress of the transfer. It can take several minutes to load the balances, depending on the number of transactions in the database. After the transfer is complete, the system returns to the Closing accounts form where the accounts and balances associated with them display..

NOTE: The determination of which columns to populate is made based on the Close option selected when you set up each account in the Chart of Accounts.

Procedure: Create a Closing Sheet - Make Adjustments or Transfers

Follow these steps to make adjustments or transfers between accounts.

1. From the Closing accounts form, select an account, and then click the Transfers button to make adjustments or transfers between ledger accounts after the balances are transferred into the worksheet.

2. Enter the description in the Transaction text field. 3. Enter an Amount, and the Offset account to transfer the amount to. 4. After you add all the transfers for the selected account, close the

form.

FIGURE 10.5 TRANSFERS FORM



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Post the Closing Sheet

After the necessary transfers or adjustments are complete, click the Post button from the Closing accounts form to post the closing sheet. The closing sheet only posts to the closing period.

At this time, also run reports and verify results before you close the period and transferring ending balances into the new year as opening balances.

HINT: To post the closing sheet, you must open the closing period in the Periods form. After you post the closing sheet, ensure that you change the period back to Stopped.

Test Your Knowledge

1. What is the closing sheet used for? (Select all that apply)

( ) To show an advanced view of the balances on accounts ( ) To transfer opening balances to the new fiscal year ( ) To create a new fiscal year ( ) To make adjustments to the balance sheet before closing

2. Which posting layer should you use on the closing sheet for posting year-end transactions?

( ) Closing ( ) Current ( ) Normal ( ) Opening

Transfer Opening Balances After you verify ending balances, you can transfer ending balances into the new year as opening balances.

Procedure: Define Fiscal Year Close Parameters

Before transferring any balances in the new fiscal year, verify the fiscal year close settings in the General ledger parameters form. Follow these steps to verify fiscal year close parameters.

1. Click General ledger, click Setup, and then click Parameters.



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2. Select the Delete close-of-year transactions during transfer check box to delete open transactions and system generated closing transactions when a transfer is repeated. This can process the transfer multiple times if it is necessary but only creates one opening entry. If it is clear, the previous transfers are not deleted. Instead, the system transfers the net adjustments compared to the last time that a transfer is performed. This allows for the tracking of historical transfers, but many transactions are created.

3. Select the Create closing transactions during transfer check box to create closing transactions for all the ledger accounts, including the profit and loss accounts, when running the opening transactions job. This does not mean that it transfers profit and loss balances but only that it creates closing transactions.

4. Select the Set period status to year closed check box to require all fiscal periods for the year to be closed.

CAUTION: If a period is closed, adjustments, which may be required by the auditor, are not possible.

5. Select the Voucher number must be filled in check box to enter a voucher number when opening transactions are created for a new fiscal year.

6. In the Limited number of open fiscal years field, enter how many open fiscal years are allowed in Microsoft Dynamics AX.

Transfer Opening Balances

In the opening transactions process, Microsoft Dynamics AX 2009 creates:

• A line for the opening transaction. This line makes up the opening balance for the new year.

• A transaction for each currency and dimension. It is necessary to maintain this to keep statistics and financial reporting available to the user. You can transfer balances as frequently as needed during the year-end close process.

Procedure: Transfer Opening Balances

After you verify the parameter settings, follow these steps to transfer opening balances.

1. Click General ledger, click Periodic, click Fiscal year close, and then click Opening transactions.

NOTE: The General Ledger parameters section is view only. You can change these settings only by using the General ledger parameters form.



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2. Enter the End date of the fiscal year. 3. Profit and loss accounts are always reset by the system. However,

you must specify the transfer method for the balance sheet accounts. In the Balance accounts field, designate how opening balances for balance sheet accounts transfer by selecting one of the following two options: • Reset - resets the balance accounts and enters the opening

balances for the balance sheet accounts manually • Closing > Opening - continues with the balance sheet accounts,

and has the opening transactions created automatically by the system

4. Enter the Account for transfer of year-end result. The account specified in the System accounts form as the Income Summary Clearing Account defaults, but can be changed.

5. Enter the Voucher Number for the opening transactions that are created automatically. This is mandatory if the Voucher number must be filled in check box is selected in the General ledger parameters form.

6. Click OK when all the fields are entered. This process may take several minutes, depending on the amount of data. When the process is complete, check the account balances or print a financial statement.

FIGURE 10.6 OPENING TRANSACTIONS FORM



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Procedure: Transfer Opening Balances - Dimensions

Follow these steps to specify multiple equity account dimensions during the transfer of opening balances for each account to a new fiscal year.

1. From the Opening transactions form, select the Dimensions tab. 2. Select the Transfer financial dimensions check box to include

financial dimensions on the opening transactions generated for the balance sheet accounts. If the option is not selected, the financial dimensions associated with the balance sheet transactions will not move forward.

3. In the Profit and loss transactions area, select from the drop-down list a dimension code to close all profit and loss transactions to a specific dimension code for any financial dimensions that are not Closing dimensions. For example, Purpose is not selected as a closing dimension. Purpose has four dimension codes of 100, 200, 300 and 400. Select dimension code 100 to close all profit and loss transactions to this specific dimension code for the Purpose dimension.

4. Select the Close all check box if the profit and loss transactions must be closed to the dimension codes for this dimension based on the dimension code entered on each profit and loss transaction. For example, Department is selected as a closing dimension. Department has four dimension codes of 01, 02, 03 and 04. Profit and loss transactions entered for Department 01 will be closed to Department 01, Profit and loss transactions entered for Department 02 will be closed to Department 02 and so on. If the close all check box is selected, and a specific dimension code is also selected, the selected dimension code will be ignored during the opening transaction process.



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NOTE: The close all check box and the dimension code drop-down list selection are optional and can be modified at any time.

FIGURE 10.7 OPENING TRANSACTIONS FORM, DIMENSIONS TAB

Test Your Knowledge

1. List the steps that are involved in transferring opening balances in order.

Step:

_____: Click OK

_____: Enter the Account for transfer of year-end result

_____: Click General ledger, click Periodic, click Fiscal year close, and then click Opening transactions

_____: Select Closing > Opening

_____: Enter the End date of the fiscal year

_____: Enter the Voucher Number



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Lab 10.1 - Year-End Close Scenario

It is the end of the fiscal year 2007. Phyllis, the Accounting Manager at Contoso, must create a closing sheet and make the following adjustments:

• 2,500 USD (U.S. Dollars) from account number 110130 to account number 110110

• 800 USD from account number 403150 to account number 110110 • 1,250 USD from account number 140750 to account number 110110 • 500 USD from account number 220270 to account number 110110

When the adjustments are finished, she must post the closing sheet and create the opening balances for the next fiscal year.

Challenge Yourself!

Help Phyllis create a closing sheet, make adjustments, post the closing sheet, and create the opening balances for the next fiscal year.

Need a Little Help?

• Open the 6/30/2008 fiscal period. • Create and post a closing sheet for 2007. • Transfer opening balances.

Step by Step

Follow these steps to open the fiscal period.

1. Click General ledger, click Setup, click Periods, and then click Period.

2. Select the period that starts on 6/30/2008. 3. Click the Status arrow, and then click Open. 4. Close the form.

Follow these steps to create and post a closing sheet for 2007.

1. Click General ledger, click Periodic, click Fiscal year close, and then click Closing sheet.

2. Click CTRL+N to create a new record. 3. In the Closing sheet field, enter 2007. 4. In the Name field, enter 2007 Closing Sheet. 5. In the Posting layer field, click the arrow, and then click Current.



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6. In the Period code field, click the arrow, and then click Closing. 7. Click the General tab. 8. In the From field, type 07012007. 9. In the To field, type 06302008. 10. In the Post field, type 06302008. 11. Click the Closing accounts button. 12. Click the Load balances button. 13. Select the Delete existing accounts check box. 14. Click OK. 15. Click Account number 110130. 16. Click the Transfers button. 17. In the Transaction text field, type 2007 close. 18. In the Amount field, type 2500. 19. In the Offset account field, click the arrow, and then click Account

number 110110. 20. Close the form. 21. Click Account number 403150. 22. Click the Transfers button. 23. In the Transaction text field, type 2007 close. 24. In the Amount field, type 800. 25. In the Offset account field, click the arrow, and then click Account



number 110110. 38. Close the form. 39. Click the Post button. 40. Click Close to close the Infolog. 41. Close the form. 42. Click Voucher to view the transactions. 43. Close all the forms.



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Follow these steps to transfer opening balances.

1. Click General ledger, click Periodic, click Fiscal year close, and then click Opening transactions.

2. In the End date field, type 06302008. 3. In the Voucher number field, type 123Open. 4. Click OK. 5. Click Close to close the Infolog.



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Summary The fiscal year in Microsoft Dynamics AX 2009 can be:

• Set to any length. • Divided into any number of accounting periods.

You can set up both fiscal year and accounting periods according to:

• Years • Months • Days

Each accounting period can be closed completely for more transactions. Selected users can be able to continue an update of one or several modules.

After the reconciliation of accounts and valuation of inventory, you may have to enter year-end transactions. You can do this in a simple closing sheet. Use a closing sheet to post and report year-end transactions separately from everyday business transactions.

Use the opening transactions option to:

• Reset the profit/loss accounts. • Transfer balances on the balance sheet accounts into the new fiscal

year.

If opening balances already are created and additional updates of the previous fiscal year are necessary, repeat the opening transactions job as many times as needed.

You can run the year-end job as many times as needed. In Microsoft Dynamics AX 2009, the opening balances update correctly. If the Chart of Accounts for the new year differs from the previous year, you can create the opening transactions directly on the new accounts. This is made possible through the option to set up a different opening account for each account on the Chart of Accounts.



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Quick Interaction: Lessons Learned Take a moment and write down three key points you have learned from this chapter

1.

2.

3.



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Solutions Create a New Fiscal Year

1. Put in order the steps required to create a new fiscal year.

Step:

3 : Enter start of the fiscal year

7 : Click OK

1 : Click General ledger, click Setup, click Periods, and then click Periods

5 : Enter the desired length of the period

6 : Enter the Unit

2 : Click the Create new fiscal year button

4 : Enter close of the fiscal year

Control Transactions in a Closing Period

1. What is the difference between a stopped period and a closed period?

MODEL ANSWER:

With a stopped period, no additional postings can occur, and the period can be reopened. With a closed period, no additional postings can occur, and the period cannot be reopened.

2. Is it possible to restrict user access to the application during the closing process, and if so, how?

MODEL ANSWER:

Yes, click General ledger, click Setup, click Periods, and then click Periods. In the Periods form, click the Module status tab. Select None to deny everyone access to each selected module, or select User Group to give access to a specific user group.



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Create and Post a Closing Sheet

1. What is the closing sheet used for? (Select all that apply)

(√) To show an advanced view of the balances on accounts ( ) To transfer opening balances to the new fiscal year ( ) To create a new fiscal year (√) To make adjustments to the balance sheet before closing

2. Which posting layer should you use on the closing sheet for posting year-end transactions?

( ) Closing (•) Current ( ) Normal ( ) Opening

Transfer Opening Balances

1. List the steps that are involved in transferring opening balances in order.

Step:

6 : Click OK

4 : Enter the Account for transfer of year-end result

1 : Click General ledger, click Periodic, click Fiscal year close, and then click Opening transactions

3 : Select Closing > Opening

2 : Enter the End date of the fiscal year

5 : Enter the Voucher Number



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