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Crestwood Associates

Year End Close – Avoid This Gotcha in Microsoft Dynamics GP


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    Well the end of another year is upon us.  And besides the usual short-lived New Year’s resolutions, this is also the time to plan to close the year on your Dynamics GP accounting system.  If you have worked with Dynamics GP for some time and gone through a few year-end closes, you may be very familiar with the steps you need to take.  If you are new to Dynamics GP or considering Dynamics GP and wondering what is involved in this process, you will be pleased to know that there is excellent documentation available.  Both your User Reference guides and official Microsoft training courseware defines some of the typical steps you would go through to close the year.  If you do not have a copy of the training courseware, these are available for download via the Microsoft Customer self serve portal – CustomerSource.

    The typical steps for year-end include:

    -the standard closing of other modules,
    -posting adjusting entries,
    -printing critical Trial Balance Reports,
    -making a backup,
    -and then running the closing processes.

    But there is one step that if overlooked can lead to inaccurate results that are not always easy to resolve.

    When you first set up your accounts, you identify the posting type as either Balance Sheet or Profit and Loss.  This not only drives how that data is used in financial reporting but also determines how it is impacted during a year-end close.  Any profit and loss account is zeroed out with the corresponding update going to Retained Earnings.  Balance Sheet accounts do not get cleared to Retained Earnings.  If you mistakenly identify one account as the other, you will either clear an account that should not be cleared, or leave an account balance that should be cleared and moved to your Retained Earnings.  Either way, this leads to incorrect financials and a big mess to clean up.

    So, as part of your year-end processes, include a review of your accounts to make sure they are coded properly.  This can most easily be done by either running an Accounts report or by creating a Smartlist.  If your chart of accounts is organized in such a way where you use a consistent starting number for all assets, liablities, revenue and expenses, it will be easier to identify the cases where an account has the wrong posting type.  Do this one simple check and save yourself a big headache in trying to clean up a mess!

    Submitted by Indiana Dynamics GP Partner Crestwood Associates LLC.

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