Introduction
Introduction
The Period Closing Voucher in Empress is a crucial tool that marks the end of an accounting period in your business. This feature ensures that all profits and losses have been accounted for, providing a clean slate for the start of the next fiscal period.
From a business perspective, the Period Closing Voucher is essential for accurate financial reporting and audit processes. It helps ensure that your accounting records are up-to-date and balanced, making it easier to monitor your business performance and make informed decisions.
Primary Functions and Benefits
The primary function of the Period Closing Voucher is to make special entries to your accounts, such as:
- Depreciation
- Changes in Asset Values
- Deferred Taxes and Liabilities
- Updates on Bad Debts
Once these entries have been made, your business’s Profit or Loss is recorded, and your Income and Expense accounts are reset to zero. This process is crucial for starting a new fiscal year or period with a balanced Balance Sheet and a fresh Profit and Loss account.
In Empress, you can easily manage these entries via a Journal Entry for the current fiscal year, followed by a Period Closing Voucher to reset all Income and Expense accounts.
To access the Period Closing Voucher feature:
Home > Accounting > Opening and Closing > Period Closing Voucher
Creating a Period Closing Voucher
Here’s how you can create a new Period Closing Voucher:
- Go to the Period Closing Voucher list and click on New.
- Set a Posting Date.
- Select the appropriate account, typically ‘Reserves and Surplus’.
- Add any relevant remarks.
- Click Save and Submit.
Understanding the Fields
- Transaction Date: The date when the Period Closing Voucher is created.
- Posting Date: The date when the entry should be executed. This date should coincide with the end of your Fiscal Year (e.g., December 31st).
- Closing Fiscal Year: The year for which you’re closing your financial statement.
- Book Cost Center Wise Profit/Loss: When enabled, this option records closing entries according to each income & expense accounting entry’s cost center.
After Submission
Upon submitting the Period Closing Voucher, Empress creates accounting entries (GL Entry) that reset all your Income and Expense Accounts to zero and move the Profit/Loss balance to the Closing Account.
You should select a liability account such as Reserves and Surplus, any Revenue Reserve account, or Owners’ Capital account as the Closing Account.
If Book Cost Center Wise Profit/Loss is enabled, the net profit & loss will be allocated based on the cost center of each individual transaction.
Note: If additional accounting entries are made in a closing Fiscal Year after a Period Closing Voucher was created for that Fiscal Year, you should create another Period Closing Voucher. This will transfer the remaining P&L balance into the Closing Account Head.
Conclusion
The Period Closing Voucher in Empress is a powerful feature that enhances your financial management processes. It helps to ensure accurate reporting and provides a comprehensive view of your business’s financial performance. As a business user, understanding and using this feature can significantly streamline your accounting procedures and improve efficiency. For further assistance, please refer to the Empress user guide or contact our support team.