Professional Documents
Culture Documents
Closing Journals
Release 11i
July 2001
Jan Godfrey
Table of Contents
INTRODUCTION 3
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Introduction
General Ledger can create closing journals for year-end and other closing periods.
n Income Statement Close: This journal closes all of the income statement accounts to
the retained earnings account.
n Balance Sheet Close: This journal posts all asset and liability balances to a closing
account that you specify. This is designed to meet globalization requirements.
Oracle General Ledger’s closing journals address global audit and statutory reporting
requirements for Greece, Italy, Portugal, Spain, Columbia, Mexico and a few other
countries. Other countries, such as the United States, may have the need to create an
auditable closing journal at times other than year-end. These journals can fulfill both
requirements.
4. Complete your routine accounting before the last day of the year.
6. In the last adjusting period of the fiscal year you want to close:
Note: You are closing actual balances. You cannot close budget
or encumbrance balances.
In Release 11.5.2 (or after applying Patchset A for 11.5.1 (1339658)), there are two
options for the Close Process - Create Income Closing Journals program. Only the first
option is available in 11.5.1 (without Patchset A). It appears that at this time (10-NOV-
2000), that only the first option is available in 11.0 also.
1) Journal entries are created to reverse debits and credits of ending year-to-date actual
balances for the period you want to close. The income statement accounts are zeroed out,
and the balance (net of the reversed revenue and expense accounts) is transferred to the
closing account you specify. If the account processed has both debit and credit balances,
the two balances will not be netted. Instead, that account’s debit balance is posted to the
credit column and the credit balance is posted to the debit column in the same journal
line. To use this option, do not specify an Income Offset Account when running the
program.
2) Income Statement Offset Account Option - Instead of zeroing out each revenue and
expense account, you can choose to post the reciprocal of the net income amount to a
single income offset account while the net income amount is posted to the retained
earnings account. The program will take the net sum of the revenue and expense
accounts. This sum includes the balance in the income statement offset account.
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To use the new option (2) , just specify a value for the Income Offset Account parameter
whenever you run the Close Process - Create Income Statement Closing Journals
program.
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Income Statement Closing Example
Balances of Income Statement accounts before running the Income Statement Close
Program, and posting the journal:
currency USD
No specific Company requested
YTD-Actual
Company Account Cost Center close2-99
----------------------------------------- --------------------
Parameters for running the program ‘Close Process - Income Statement Close’:
- close2-99 is an adjusting period that contains the last day of the year. This is the last
period of the year.
- 3300 is the retained earnings account.
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Income Closing Journal created:
Batch Name: Income Statement Close: Request 463955 close Batch Effective Date: 31-DEC-99 Balance: Actual
Posted Date:
Journal Entry Name: Income Statement Close: USD Category: Income Statement Close
Journal Reference: Currency: USD
Line Accounting Flexfield Trans Date Description Line Item Debits Credits Units
---------------------------------------------------------------------------------------------------------------------------------------------
10 01.7111.001 31-DEC-99 Income Statement 0.00 125.00 0.00
20 01.4400.001 31-DEC-99 Income Statement 500.00 0.00 0.00
30 01.4400.002 31-DEC-99 Income Statement 3,000.00 0.00 0.00
40 00.6100.000 31-DEC-99 Income Statement 100.00 0.00 0.00
50 00.9999.001 31-DEC-99 Income Statement 0.00 100.00 0.00
60 00.3300.000 31-DEC-99 Income Statement 100.00 100.00 0.00
70 01.3300.000 31-DEC-99 Income Statement 125.00 3,500.00 0.00
-------------------------------------------------
Header Total: 3,825.00 3,825.00 0.00
---------------------------------------------------
Batch Total: 3,825.00 3,825.00 0.00
---------------------------------------------------
Closing Journal Total: 3,825.00 3,825.00 0.00
---------------------------------------------------
Grand Total: 3,825.00 3,825.00 0.00
- Run the Open Period program to open the first period of the new
fiscal year. The Open Period program closes out all revenue and expense
accounts to the Retained Earnings account. However, because
posting of the closing journals has already zeroed out the revenue
and expense accounts to the Retained Earnings account, there are
no balances to transfer and no further effect on Retained Earnings.
The retained earnings balance is carried forward from the prior period.
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- If revenue and expense adjustments need to be made after opening
the new fiscal year, posting those back–dated adjustments will
automatically update the beginning balances of the Retained
Earnings account for all open periods in the new year. However,
amounts in the closing journal will not reflect the adjustments. For
accuracy, you must reverse the closing journals, post, enter your
adjustments, run the Create Income Statement Closing Journals,
and post.
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If the closing account is specified as an income statement account,
the revenue and expense account balances are transferred to this
closing account. There is no effect on average balances.
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Balance Sheet Close
When you run Create Balance Sheet Closing Journals, journal entries
are created to reverse debits and credits of ending year–to–date actual
balances for the period you want to close. The balance, net of the
reversed asset and liability accounts, is transferred to the closing
account you specify.
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Balance Sheet Close Example
Balances of Balance Sheet accounts before running the Balance Sheet Statement Close
Program, and posting the journal:
Jan sob Date: 03-
NOV-00 13:12:24
All Balance Sheet Accounts Page: 1
Current Period: close2-99
currency USD
No specific Company requested
YTD-Actual
Company Account Cost Center close2-99
------------------------------------------ -----------------
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Journal created by the Balance Sheet Closing program:
Batch Name: Balance Sheet Close: Request 463981 close2-9 Batch Effective Date: 31-DEC-99 Balance: Actual
Posted Date:
Journal Entry Name: Balance Sheet Close: USD Category: Balance Sheet Close
Journal Reference: Currency: USD
Line Accounting Flexfield Trans Date Description Line Item Debits Credits Units
---------------------------------------------------------------------------------------------------------------------------------------------------
10 01.2111.001 31-DEC-99 Balance Sheet Clo 125.00 0.00 0.00
20 01.1001.001 31-DEC-99 Balance Sheet Clo 0.00 500.00 0.00
30 01.2111.100 31-DEC-99 Balance Sheet Clo 0.00 3,000.00 0.00
40 01.9800.000 31-DEC-99 Balance Sheet Clo 3,500.00 125.00 0.00
---------------- ---------------- ----------------
Header Total: 3,625.00 3,625.00 0.00
- In the first adjusting period of the new fiscal year, reverse the
balance sheet closing journals to repopulate the balance sheet
accounts.
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Balance Sheet Closing Journal Attributes
- The effective date of your closing entries is the last day of the
period you select in the Parameters window, typically an
adjusting period representing the last day of the fiscal year.
- General Ledger automatically creates a separate closing account
for each balancing segment if you specify an account range that
includes multiple balancing segments.
- Closing journals are marked for reversal in the period following
the period the closing journals were generated. To change the
reversal method default, see Changing The Default Reversal
Method, below.
- General Ledger closes functional currency balances only. Foreign
currency balances are ignored.
Companies using average balance processing should create an accounting calendar with
two adjusting periods at the end of the fiscal year. Assign the last day of the year to both
adjusting periods. The first adjusting period is used to generate the Closing Journals. The
second adjusting period is used to reverse the closing journal. This ensures that average
balance calculation is unaffected.
Technical Information
Tables:
n GL_YEAR_END_BAL_INT_XX
n GL_YEAR_END_ACCT_INT_XX
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Indexes:
n GL_YEAR_END_BAL_INT_N1
n GL_YEAR_END_BAL_INT_N2
n GL_YEAR_END_BAL_INT_N3
n GL_YEAR_END_ACCT_INT_N1
n GL_YEAR_END_ACCT_INT_U1
Related Bugs/Patches
Glossary of Terms
Question: Is running the Income Statement Closing Journals and Balance Sheet Closing
Journals programs a requirement?
No, these are both optional programs. However, running the Income
Statement Closing Journals program will give you the audit trail for the
Retained Earnings calculation.
Question: How do you size the year end tables that are used with the closing journals
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programs?
The recommended sizes for the tables and indexes are already pre-seeded and
can be found in the Storage Parameters form (Setup -> System -> Storage).
You can update the values here as you see fit. See Note 141226.1 for more
detailed information.
Question: You ran the closing journals program(s) and now you see zeros in your FSG
Income Statement for the last period of the year. You may see zero balances
in other periods, depending on which period you ran the program in.
You need to reverse the journal you posted that was created by the Income
Statement and/or Balance Sheet Closing Journals programs. See Note
141110.1 for more information.
Sources
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