Before you complete a year-end close, verify the following items are created: 

• GL Accounts

  To designate a GL account as the retained earnings account for the current fiscal year, the GL Type for the GL account must have a value of Equity in its Account Type field. For all revenue and expense GL accounts, the GL Type for the GL account must have a value of Income Statement in its Statement Type field.

• Fiscal Years

  To learn more, see Create a Fiscal Year.

• Periods

  When you create periods (typically 12 monthly periods for a fiscal year), create one more period—an adjustment period that is typically called Period 13. To designate a period as Period 13, select Period 13 in the Type field.

  Period 13 includes the journal entry to transfer income statement balances to retained earning and any adjusting journal entries that are atypical of your normal business operations, but that apply to the year-end close. You close Period 13 to close the fiscal year. If necessary, you can later re-open this period to create a journal entry for an adjustment that applies to the year-end close.

1. From the Fiscal Years page, click the Fiscal Year that you want to close.
2. On the Fiscal Year detail page that is displayed, complete the following steps:
   1. Verify that the Retained Earnings field is populated.

      This field designates the GL account for retained earnings.

   2. Click Close Fiscal Year.

      The periods in the fiscal year are displayed in a list on the Fiscal Year End Close page. Period 13 is not displayed on this page. Closed periods have a green check mark, and open periods have a red alert icon.

3. On the Fiscal Year End Close page, complete the following steps:
   1. If any period is still open, click that period to open the Periods page.

      From the Period detail page, you can close the period, then return to the Fiscal Year page to close the fiscal year. You cannot close a year until all of its periods are closed. To learn more about closing periods, see Period Close.

   2. When all periods are closed, click Transfer Balances to Retained Earnings.

      The net amount in revenue and expense accounts for each period in the year is calculated, and a journal entry is automatically created for that net amount. This journal entry clears all revenue and expense amounts to the designated retained earnings account.

      A message is displayed alerting you that the income statement balances are successfully transferred to retained earnings.

4. At the end of the message, click View Journal Entry.

   The Journal Entry detail page is displayed for the balance transfer.

5. On the Journal Entry detail page, complete the following steps:
   1. If necessary, select Finalized to finalize the journal entry.
   2. To post the journal entry to the GL, click Generate Accounting Entry under Custom Links in the Source Documents section.

      If you do not click this link, the Trial Balance report does not include the journal entry.

      After balances are transferred to retained earnings, the name of the Transfer Balances to Retained Earnings button changes to Cancel Existing Balance Transfer. If you finalize the closing journal entry by mistake or if you notice another error (for example, if the accounting entry lines for revenue and expense accounts do not have a value in the Accounting Code field), you can click Cancel Existing Balance Transfer to cancel the journal entry to re-set the balances in the income statement accounts. Then you re-open the appropriate period, make the necessary adjustments, re-close the period, and re-close the fiscal year.

6. To automatically close the fiscal year, complete the following steps to close Period 13:
   1. From the Period detail page for Period 13, click Edit.
   2. Clear the Open checkbox, and select the Closed checkbox.
   3. Click Save.

After you close a fiscal year, you can later create a journal entry for an adjustment that is atypical of your normal business operations and that applies to the year-end close, but not to a specific period in the fiscal year. For this scenario, you create a journal entry in Period 13.

1. To re-open Period 13, complete the following steps:
   1. From the Period detail page for Period 13, click Edit.
   2. Clear the Closed checkbox, and select the Open checkbox.
   3. Click Save.
2. From the Fiscal Years page, click the Fiscal Year for which you want to create a journal entry in Period 13.
3. On the Fiscal Year detail page that is displayed, click Close Fiscal Year.
4. On the Fiscal Year Close page that is displayed, click Cancel Existing Balance Transfer to cancel the closing journal entry to re-set the balances in the income statement accounts.
5. Complete the following steps to create the journal entry:
   1. From the Journal Entries page, click New.
   2. On the Journal Entry detail page that is displayed, complete the following fields in the JE header:
      • Type: Select Year End Adjustment.
      • Posting Date Period: Enter Period 13.
      • Finalized: Select this checkbox.
   3. Click (Add New) to add lines to the JE.
   4. Click Save 

      You can cancel, but not void, this journal entry.

6. To post the journal entry to the GL, click Generate Accounting Entry under Custom Links in the Source Documents section of the Journal Entry detail page.
7. Close the fiscal year again.

   To learn more, see Close the Fiscal Year.