Closing Journals for Average Balance Ledgers

The Create Income Statement Closing Journals and Create Balance Sheet Closing Journals processes create journal entries for standard account balances for ledgers with average balancing enabled.

Create an accounting calendar with two adjusting periods at the end of the fiscal year that you want to close. These two adjusting periods represent the last day of the fiscal year and ensure that the average balance calculation is unaffected.

• First adjusting period: Run the closing journal process in this period.

• Second adjusting period: Reverse the closing journal in this period.

The effective date of the closing journal entries is the last day of the specified period. You can assign effective date rules for the journal source called Closing Journals on the Journal Sources page.

Note: When you post closing journals, standard and average balances are updated.

• If you specify the closing account as an income statement account, then the revenue and expense account balances are transferred to this closing account. Average balances aren't impacted.

• If you specify the closing account as a balance sheet account and defined the period as the last period of the fiscal year, then the average balance of the closing account is updated. The average balance of the Net Income account and the net average of all income statement accounts are also updated.