end of year and thank you

[David Harrison]

On Tue, 14 Dec 2004 13:18:07 -0500, Laurent Duperval
<lduperval at videotron.ca> wrote:
> Bill Wohler wrote:
> 
> >Another thing I think Derek suggested once was to transfer an amount of
> >money from an Equity account into each account to zero each one out to
> >make reports nicer. i can't remember if it was best to do it on December
> >31 or January 1... Maybe someone who has actually done this can add the
> >details.
> >
> >
> >
> 
> 
> I think it's better on Jan 1.
> 

Closing entries are normally done on the last day of the year, so
December 31 would be better.  If you did the entry on Jan 1, then your
reports for the current year wouldn't work.  In other words, if you
did a report for Jan 1 to Dec 31, the closing entries for the prior
year would be included in that report.  Your income for the current
year would be wrong.

To do the entry you would make an entry to zero out all the income and
expense accounts, and the balance (your income/loss) goes to an equity
account called retained earnings.

Keep in mind that if you do the closing entry, you won't be able to
produce a comparative income statement as you will have zero'd out
last year's income.

Also, before you make this entry, make sure that all your bookkeeping
is done for the prior year and there are no adjusting entries to be
done (such as booking amortization, income taxes, or whatever).  I
would then create a copy of the file and use one copy as my working
file for the next year, and one as an archive.

HTH 

-- 
David Harrison, BAccS, CGA