Interpreting Year End Closing Results

The process of year end closing closes the profit and loss (P/L) accounts to retained earnings and generates the balance forward amounts. To maintain the integrity of financial reporting, the entries generated by year end closing are stored in special system-defined periods. The year end closing entry to book the current year net income to retained earnings is stored in period 999, and the balance forward amounts are stored in period 0.

The following example illustrates how General Ledger stores amounts in a ledger after closing has been performed for the old year (998 is an adjustment period). This ledger uses a simplified calendar containing only four accounting periods:

Amounts Stored in Ledger After Year End Closing

Note:

The General Ledger financial statement reports do not include beginning balances for profit and loss accounts.