Re: Yearend Transactions

[Chris Travers <..hidden..>]

On Sun, Apr 25, 2010 at 11:38 PM, Luke <..hidden..> wrote:
> On Sun, 25 Apr 2010, Chris Travers wrote:
>
>> In LedgerSMB 1.2.x the yearend routine is not substantially changed
>> from that of SQL-Ledger.
>>
>> Neither one handles drawing accounts.  The version in 1.3 doesn't
>> handle drawing accounts either (this will probably done in 2.0).
>
> Fine, that's what I thought.  However, what then is the meaning of this
> from the manual?
>
> Equity drawing/dividend accounts are also moved, but the investment
> accounts are not.

Accounting process.  That's something the software doesn't automate.
I will look at clarifying it.

Basically you can divide accounts into three rough categories:

1)  Assets and obligations regarding assets (Asset + liability accounts)
2)  How much money was earned and spent including payments to owners
(Income, expense, and some equity accounts)
3)  Tracking investments in the business (capital + retained earnings accounts).

Only the second category of accounts is closed out in year-end.  The
difficulty comes from the fact that some equity accounts are closed at
the end of the year and others are not.  The software currently
handles income/expense accounts, but the equity accounts which need to
be closed (dividend + drawing accounts) are not.

You COULD reclassify equity accounts which are to be closed as expense
accounts during the year-end run and then alter them back.

The other option is to do year-end in the software and then close out
the equity accounts which are to be closed in a separate GL
transaction.

Hope this helps.

Best Wishes,
Chris Travers