Fiscal Year Close-Out Transaction

Close Out Year Transaction prepares a draft general ledger entry for a selected fiscal year. When posted, the entry moves the year's revenue, expense, contra-revenue, and contra-expense balances into a retained earnings account. Finance can inspect and correct the draft before anyone posts it.

Use this after the year's operating transactions, reconciliations, and accounting adjustments have been reviewed. Creating the draft is one step in the year-end close, not approval of the financial statements or closure of the fiscal period. Versa already calculates Retained Earnings to Period Start in financial reports, so you need this entry only if your company keeps retained earnings in a dedicated account.

Before you start

• Entity: Select the entity whose year you intend to close. The draft is prepared for that entity's accounts and fiscal year.
• Access: You need Manual GL Transactions to open the close-out screen and create the draft. The person who posts it also needs GL Posting. Your organization's approval process may require a separate review before posting.
• Where: GL > New G/L Entry > Close Out Year Transaction.
• Accounting review: Have finance confirm the fiscal-year dates, final revenue and expense balances, retained earnings account, and any outstanding adjustments. Agree on who will review and post the entry.

Create and review the draft

1. Open GL > New G/L Entry > Close Out Year Transaction.
2. Under Choose a Fiscal Year To Close Out, select the intended year. Years are listed by their end date, for example FY To 2025-12-31. Check both the year and the selected entity before continuing.
3. Select Create. Versa opens an Edit Draft Transaction page. The entry is a draft at this point. Selecting Create does not post it.
4. The Transaction Date is the last day of that fiscal year, and the description reads “Close out FY To” followed by that date.
5. Review every account and amount in the draft against the approved year-end balances.
6. Versa places the net amount on one of the entity's accounts of type Retained Earnings/Deficit. You cannot choose it on the close-out screen. If the entity has more than one such account, confirm the line uses the intended one and change it if needed. Versa calculates this line so the draft balances.
7. If a balance or account is unexpected, stop and investigate the underlying transactions and chart of accounts with your accountant. Make an approved correction before posting. If a correction changes the year-end balances, prepare a fresh close-out draft and remove any unused draft under your normal controls.
8. Submit the draft for approval if your organization uses a GL approval workflow.
9. An authorized user can then select Post Transaction when the draft is ready and the transaction date is in an open posting period.
10. Versa shows the new transaction number. Find the entry under GL > List Transactions > View All.
11. Review the year-end financial reports. Confirm that the revenue and expense balances and retained earnings presentation agree with the approved close. Keep the journal and supporting review with the finance records.

Coordinate the year-end handoff

The accounting team should finish reconciliations, identify unposted or late transactions, and approve any final adjustments before preparing the close-out entry. The reviewer needs the final trial balance, the selected fiscal year and entity, and an explanation for material closing amounts. After posting, tell the financial-report owner that the entry is ready for verification. Only then should the person responsible for fiscal periods decide whether to close the year to further posting.

Before selecting Create again, check Draft Transactions for an earlier close-out draft for the same year and entity. While that draft is unposted, a new draft repeats the same amounts, and posting both would close the year twice. After a close-out is posted, a new draft includes only revenue and expense activity posted to that year since then. If there is none, the draft has a single zero retained earnings line and cannot be posted, so delete it.

Related year-end guidance

Retained Earnings to Period Start Line in Financial Reports explains how retained earnings appear in reports. Fiscal Period Controls explains how to close a posting period.

If you don't see what you expect

• Close Out Year Transaction is missing: Ask your administrator to check your Manual GL Transactions permission and confirm that you are in the intended entity.
• The fiscal year is not listed: Confirm the selected entity and its fiscal calendar. The list includes years that start before the firm's latest posted transaction date. Ask finance to check whether posted activity has reached the requested year before creating a draft.
• Create returns to the same page: Versa shows “Error creating transactions.” Ask finance to check that the entity has an account of type Retained Earnings/Deficit.
• Post Transaction is not shown: The draft must balance, have at least two lines, not be set to recur, and be approved if your company uses GL approval.
• Posting is refused: A user without GL Posting sees “Access denied”. If the transaction date is in a closed period, Versa says the date must be during an open accounting period. Ask finance before reopening the period.