Period End Closing in Financial Accounting

Period End Closing in Financial Accounting

Purpose

Closing operations are periodic tasks and can be subdivided in FI as follows:

·         Day-end closing

·         Month-end closing

·         Year-end closing

The closing operations component helps you prepare and carry out the activities required for day-end, month-end, and year-end closing. For this purpose, the system provides a series of standard reports that you can use to generate evaluations and analyses directly from all of the posted account balance. The system helps you carry out the following:

·         Creating the balance sheets and P&L statements

·         Document the posting data

No additional postings are required for day-end closing.

You can use the following evaluations for day-end closing and for documenting the posting data:

·         Compact-Document journal

·         Evaluation of the documents that have not been posted

To carry out the closing operations in G/L accounting, you first need to carry out the closing operations in the sub-ledger accounting areas you are using. These include:

·         Accounts receivable and accounts payable accounting

·         Inventory accounting

·         Asset accounting

Year-end closing is split into two phases:

• At the beginning of the new fiscal year, you open new posting periods and carry forward the balances from the previous year.
• You then prepare and create the financial statements and document the business transactions using the balance audit trail.

The SAP System offers a range of reports with which you can carry forward balances into the new fiscal year. During this process, the profit and loss accounts are carried forward to one or more retained earnings accounts. The balances of the balance sheet accounts are simply carried forward into the new fiscal year. You do not have to create special opening financial statements.

 Any postings you make in the old fiscal year automatically adjust the relevant carry-forward balance. You do not have to close the old fiscal year and carry out the closing postings before opening the new fiscal year.

 As with month-end closing, you can create all the external reports required, document the posting data, and carry out the internal evaluations.