End of period adjustments
Warning - end of period adjustments requires a fairly high level of accounting/bookkeeping knowledge. Do not carry out these operations if you are not sure what you are doing.
You may carry out end of period adjustments when certain payments and expenses cross periods. For example you may have paid insurance in June for twelve months. At the end of the financial year (assuming it is March) your insurance company has been paid for three months in advance. You therefore subtract 3 months of that payment from your expense for the current year and add it to the following year. Similar adjustments may be carried out for leases, rates, wages and salaries and for invoiced income and supplier charges.
To carry out end of period adjustments follow the sequence below:
1. Set up a ledger control record. This defines the current period/year. Note the need to include an expense and income account on this form. These are to place the required totals in the correct place in the Balance Sheet.
2. Set up the required journals. The contents of the journals do not appear on any reports. They are "buckets" to hold transaction adjustments until they are posted to the ledger. They are also used to ensure any adjustments balance. You can create default credit and debit ledger links that help simplify the entry of journal adjustments.
3. Enter the journal adjustment transactions. Each journal adjustment must consist of at least two entries, a debit and a credit. Some may have more than two. But all such entries must balance. That is, total credit value minus total debit value must equal zero. If it does not you may not post the entries to the ledger.
Start Journal adjustments from the company control form by clicking the Balance sheet button:
Or from the Main Menu -> General ledger.