|article ID: 1005643||last updated: Tuesday, June 20, 2006|
The Accounting Year End process in Mamut Business Software transfers all totals on the balance sheet accounts (nominal codes 0001 to 3999) to the new accounting year as opening balances. The Profit and Loss account (comprising nominal codes between 4000 and 9999) will be reset to reflect the new reporting period. To ensure that the balance sheet is accurately maintained, it is a requirement that the ‘net value’ or balance of the Profit and Loss Statement is journaled to a balance sheet account and carried into the new accounting year with the other opening balances.
When you undertake a year closure in Mamut, you must use a year end wizard. If a profit or loss has occurred, you will be advised that you must allocate the profit/loss before you can close the old accounting year. By running a Profit and Loss Account 1 and Balance Sheet (Detailed), you will see how the amount to allocate has been generated.
If the year-end wizard advises you that a negative amount needs to be allocated, you have a profit to allocate. A positive number, therefore, indicates a loss. The explanation for this is that income is written on the credit side of the Profit and Loss account, and when that side is highest, a profit has been made.
This profit/loss must be transferred using a journal in Journal Entry. Use, for example, journal type Miscellaneous and period 13. It is important that you use a minimum of one Balance account and one Profit and Loss account when allocating the profit/loss. Once the profit/loss has been allocated, the year end wizard will not show any amount to allocate.
An example of the journal to make is shown below. This example is based on the standard chart of accounts with a new Profit and Loss account created 9997 “Profit and Loss AccountP/L” and with a profit of £100,000 to allocate.
Date Entry No. Lno. N/C Account Name DR CR
31/12/05 M1 9997 Profit and Loss AccountP/L £100,000
31/12/05 M1 3200 Profit and Loss Account £100,000