Case: The data was improperly closed after the month-end closing. The details below outline the cases and the steps to resolve them.
a) During the month-end closing, a debit and credit balance was generated, leaving the expense account balance in the same GL instead of transferring it to Profit and Loss.
This issue occurs due to the type assigned to the GL account. For example, administrative expenses (other) are expense accounts and should have a debit nature. However, upon reviewing the system, you may find it was incorrectly set up with a DR/CR nature instead of a DR.
To investigate further, navigate to Accounting > Chart of Accounts and search for the specific expense GL, such as "Administrative Expenses (other)" in this example.
To resolve this issue, update the GL account type from Debit/Credit to Debit by following these steps:
- Go to Accounting > Chart of Accounts
- Search for the specific expense GL (e.g., Other Administrative Expenses)
- Open the GL account details
- Change the account nature from DR/CR to Debit
- Save the changes
Once the correction is made, redo the month-end closing to ensure the balances are properly transferred to the Profit and Loss account.
Here’s how the balance will be correctly closed after fixing the issue and redoing the month-end closing, this balance will be transferred to the Profit and Loss account.
Case 2- Negative balance after month-end closing-
If the balance is on the Credit (CR) side, the closing balance may incorrectly appear as a negative value on the Debit (DR) side.
This issue occurs when the Profit and Loss GL is incorrectly set up. Instead of having a DR/CR nature, it is mistakenly classified as either Debit (DR) or Credit (CR) only.
To fix the issue, first verify the Profit and Loss GL type. Go to Accounting > Chart of Accounts and search for the Profit and Loss GL account. Check if its nature is incorrectly set to Debit (DR) or Credit (CR) only. If so, change it to DR/CR to ensure proper balance handling.
Once the correction is made, redo the month-end closing by performing the closing process again. This will ensure that all balances are correctly transferred to the Profit and Loss account. Finally, verify that no amounts remain incorrectly in the expense GL.
By correcting the Profit and Loss GL type and redoing the month-end closing, the issue will be resolved, ensuring proper financial reporting.
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