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How can I transfer my fiscal year's balances to my new financial year?

Els Van Vossel (evv)
on 6/16/14, 4:04 AM 3,495 views

I have been working with Odoo for a year now. How do I re-open my financial year?

This question has been included in the official documentation.

Els Van Vossel (evv)

--Els Van Vossel (evv)--
| 6 3 7
--Els Van Vossel (evv)--

Author of some OpenERP / Odoo books

Els Van Vossel (evv)
On 6/16/14, 4:05 AM

At the end of a financial year, you will have to transfer the closing balance of that year as an opening balance to the new financial year. Odoo allows you to automatically post such an entry, allowing you to start the new financial year with the correct account balances.

You can transfer the new opening balance numerous times, because you normally don't close a year at once. Correction entries will have to be made by the accountant, due to which balances will change. The new balance can easily be transferred through a wizard, so you do not have to keep track of each correction entry made in the previous financial year.

Before generating the opening balance for your various accounts, you have to go through several steps.

1. Create the new Financial Year

Create the new financial year as explained in https://www.odoo.com/forum/Help-1/question/How-can-I-create-a-new-financial-year-54316

2. Define an Opening Period if not generated automatically

Go to Accounting > Configuration > Periods > Periods and create a new period for the financial year you wish to open (in case it has not been generated automatically). Make sure to link the period to the newly defined financial year. Tick the Opening/Closing Period checkbox to indicate that this period should be used for opening entries. Both dates typically match the first day of your financial year (e.g. 01/01/YYYY).

You can also add a period to your fiscal year from the menu Accounting > Configuration > Periods > Fiscal Years.

3. Check the Account Types

Before generating the opening entries, make sure to check the defined account types, more specifically the Deferral Method.

The deferral method determines whether and how account entries will be transferred to the new financial year. There are four possible deferral methods: None, Balance, Detail, Unreconciled.

For more information, please refer to https://www.odoo.com/forum/Help-1/question/What-is-an-Account-Type-and-how-can-I-configure-it-54106

4. Check the Link between Account and Account Type.

Check whether each account is linked to the correct account type to avoid generating an incorrect opening entry.

5. Create an Opening/Closing Journal

Go to the menu Accounting > Configuration > Journals > Journals.

Create a new journal to post your opening entries. Make sure to respect the following settings:

  • Type should be Opening/Closing Situation.
  • Standard debit/credit account will contain the transfer accounts for profit / loss.
  • Tick the Centralised counterpart option to avoid a counterpart on each line, and instead have one debit and one credit entry in the corresponding opening account.
  • The Entry Sequence which determines the automatic numbering of your postings will also be created automatically on save.

6. Generate the opening entry

To automatically generate the opening entries based on your actual books, Odoo provides a wizard. Go to the menu Accounting > Periodic Processing > End of Period > Generate Opening Entries.

In the wizard, enter the financial year for which you want to transfer the balances (Fiscal Year to close). Select the New Fiscal Year (the year in which you want to generate the opening entry). You also have to select the journal and the period to post the opening entries. The description for the opening entry is proposed by default as End of Fiscal Year Entry, but of course you can enter your own description, such as *Opening Entry for financial year YYYY*. Then you click the Create button to generate the opening entry according to the settings defined.

To have a look at the draft opening entry that has been generated, go to the menu Accounting > Journal Entries > Journal Entries. From the filterbox, click Unposted to filter only draft entries. Open the corresponding opening entry and verify the data. Click the Post button to confirm the entry.

Changes in Previous Financial Year

As long as the audit is ongoing, extra entries may be added to the financial year to close. To automatically have the correct balances, Odoo allows you to use the Cancel Opening Entries wizard. This wizard will automatically cancel the existing opening entry. To update the balances to show the correct results, you should run the Generate Opening Entries wizard again. The new opening entry will contain the correct balances. This way, you can generate your opening entry as many times as required.

Closing a Financial Year

Closing a year is not mandatory, and you could easily do that sometime in the following year, when your accounts are finally sent to the statutory authorities, and no further modifications are permitted. This action cannot be undone.

To close a financial year, use the menu Accounting > Periodic Processing > End of Period > Close a Fiscal Year.

A wizard opens asking you for the financial year to close. When the year is closed, you can no longer create or modify any transactions in that year! 

So you should always make a backup of the database before closing the fiscal year.

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Asked: 6/16/14, 4:04 AM
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Last updated: 3/16/15, 8:10 AM