Fiscal Years — define, close periods, close the year

Define your accounting years, generate the 12 monthly periods inside each, and close periods month-by-month. The Close year wizard runs the year-end procedure: posts your net income into Retained Earnings, snapshots opening balances for next year, and locks every period of the closed year.

Before you start

• You need Financial Statements permission (same access as Trial Balance, P&L, Balance Sheet).
• Your Chart of Accounts must contain at least one Equity account named "Retained Earnings" (or similar) before the year-end wizard can run.
• Closing a period is a soft lock — you can reopen it. Closing a year locks all its periods permanently; reversing it requires a manual reversing journal.

Steps

Create a fiscal year

1. Open Setup → Fiscal Years.
2. Click + New fiscal year. The system auto-suggests a name and date range based on your last year (or the current calendar year for a fresh install):
   • Name: FY2027
   • Start: first day after the last year's end date
   • End: one year minus one day later
3. If you need custom dates or a differently named year, use the API directly for now; the UI's quick-create is the fastest month-end path.

Generate 12 monthly periods

1. Select the year in the top grid.
2. Click Generate 12 periods. The system creates one period per month, named "January 2027", "February 2027", etc.
3. If periods already exist you'll get a confirm dialog — regenerating deletes any close-stamps on existing periods.

Close a period (month-end)

1. Wait for all invoices, receipts, purchases, and payments for the month to be entered.
2. Run the Trial Balance and Balance Sheet for the period — verify they tie (Trial Balance is in balance, Balance Sheet's identity holds).
3. In the periods grid, click Close on the month you're closing.
4. From this moment on, back-dated writes into that period are refused at every posting endpoint (Invoice, Receipt, Purchase, PayBill, Expenditure, Journal Entry, Return Inward) — see the Closed periods and back-dated transactions section below.

Reopen a period

1. If someone finds a missed transaction after month-end close, click Reopen on the period.
2. Post the missing transaction.
3. Close the period again.
4. This is possible only while the year is still Open — once the year is closed, its periods are Locked (not Closed) and can't be reopened from the UI.

Close the year (year-end)

1. Close every period of the year first.
2. Verify P&L for the whole year — this is the Net Income the wizard will post.
3. Click Close year… on the year row.
4. In the wizard: pick your Retained Earnings account (the system auto-selects any Equity account whose name contains "Retained Earnings" — override if needed).
5. Click Close FY2026 (or whichever year).
6. The result panel shows Revenue / COGS / Expenses / Net Income and the ID of the closing journal that was posted + the number of accounts whose opening balance was snapshotted for next year.
7. All periods of the closed year flip from Closed to Locked.

Closed periods and back-dated transactions

Once a period is Closed or Locked, any attempt to post an Invoice, Receipt, Purchase, Payment, Expenditure, Journal Entry, or Return Inward with a date inside that period is refused with:

January 2026 is closed. Ask an administrator to reopen it, or use a date in an open period.

This is what makes the reports trustworthy — a Balance Sheet you published for January stays that way. The same guard applies to the Ledger Diagnostics "Move to Suspense" flow.

To post into a Closed period: reopen it, post the transaction, close it again. To post into a Locked period (year-closed): reverse the year-end close via a manual journal, or use next period.

Tips

• The three colours are your quick status scan on the periods grid — green (Open) is postable, amber (Closed) is soft-locked, grey (Locked) is post-year-close.
• PeriodID column widths show status counts at the year level — if your year shows any non-zero Open, you can't close it.
• The wizard's auto-picked Retained Earnings account is a shortcut, not a decision — always verify it's the right account before committing. Wrong target account = closing journal in the wrong row = manual cleanup.

Common problems

• "Cannot close a Locked period" — the year has been closed; Locked periods can't be reopened from the UI. Reverse the year-end close via a journal or post to next period.
• "Fiscal year 'FY2027' already exists" — someone already created it (or the auto-name collides with a hand-created year). Rename the existing one or use the existing entry.
• "Account is typed 'Expenses', not Equity" on the close-year wizard — you picked the wrong account. Retained Earnings must be typed as Equity in the Chart of Accounts. Fix the account type first.
• "Could not find a 'Retained Earnings' account" — Chart of Accounts has no Equity account. Add one under Setup → Chart of Accounts before running the wizard.
• Net income in the wizard doesn't match your P&L — usually a timing issue: the wizard reads Ledger over the year's date range; the P&L reads the same range. If they disagree there's an account-type misclassification somewhere. Cross-check the accounts reported by the wizard against the P&L's line items.