How To Do End-of-year Closure of Books

Step 1: Generate Financial Reports

• Generate a Profit and Loss report for the period you intend to close.
  
  

Step 2: Identify Zero-Rated Accounts

• Identify all income and expense accounts that should be zero-rated as part of the year-end closure process.
  
  

Step 3: Access the Journal Entry Section

• Navigate to the Journal Entry section to begin the zero-rating process.
  
  

Step 4: Create a Journal Entry

• Click Add Journal and create the necessary debit and credit lines for the income and expense accounts being zero-rated.
  
  

Step 5: Zero-Rate Income and Expense Accounts

Post the journal entries using the following logic:

For accounts with a positive balance:

• Credit expense accounts
• Debit income accounts
  
  

For accounts with a negative balance:

• Debit expense accounts
• Credit income accounts
  
  

Step 6: Allocate the Variance to the Appropriation Account

Calculate the difference between total income and total expenses, then post the balancing entry to the appropriation account.

• If the SACCO made a profit, the appropriation account should be credited.
• If the SACCO made a loss, the appropriation account should be debited.
  
  

Step 7: Assign the Value Date

• Set the journal entry value date to the last day of the previous financial year.
  
  

Step 8: Submit the Journal Entries

• Review the entries and submit the journal.
  
  

Step 9: Confirm the Closure

Verify that:

• All income and expense accounts for the year have been zero-rated.
• The net profit or loss has been posted to the appropriation account.