14.6.1 Post the Month and Print Financials Overview
Post Month With Financials automatically retrieves each accounts starting balance for that month and all of the financial transactions recorded during that month. pc/MRP then calculates the new balances for each account and will prompt users to choose from a variety of financial reports to be created based on the newly calculated figures. This process will safely guide and allow you to close and re-close the current month or any prior month in any prior year, provided pc/MRP has previously closed the prior period. The following is an explanation of how pc/MRP closes a month and is intended for those of you who would feel more comfortable knowing what happens when you are closing a month. It is also intended to serve as a first level technical support aid when trouble shooting a close.
To close or re-close a month, you would select "Modules", "Accounting", and "Post Month with Financials". pc/MRP will display the month and year of the current close (last month that was closed) and ask you to enter the month and year you wish to close.
14.6.2 Closing, Re-closing the Current month, or Closing the Next Month
If you select to close, re-close the current month (displayed) or close the next month, pc/MRP will display the starting and ending dates of the month you selected to close. If the month has not had a previous close and option 5 in the "Configuration", "Settings and Utilities Menu" has been set to "Allow date change during month close", you can adjust the ending date of the period you are closing. This allows users to run 4-4-5 accounting periods and or adjust the close to the manufacturing schedule.
pc/MRP will inform you that it will initialize the starting balances for the month following your close. pc/MRP will ask if you wish to step through posting. Answer "No" to step through posting (you would use this option if you were out of balance and you want to step through the re-close).
Select "Display" or "Print" your financial statements.
Select "Standard" or "Custom" financial statements.
Select the financial reports you wish to print out from the screen shown below.
pc/MRP will begin closing the month by transferring the starting balance for the current month to the ending balance for each of the chart of account numbers in the chartacc.dbf file. pc/MRP will then use the transaction data base records to debit and credit the ending balances of each account as shown on the next page:
Revenue Accounts ( RN, RO) and Expense Accounts (EN, EO, EL, ET, EG)
The resulting ending balance is stored in the ending balance field of the month being closed and in the current ending balance field, cebal. The starting balance for the next month is zeroed out.
Asset Accounts (AC, AL), Liability Accounts (LC, LL) and Equity Accounts QN
The resulting ending balance is stored in the ending balance field of the month being closed and in the current ending balance field, cebal. The ending balance is then stored in the starting balance for the next month.
YTD Retained Earnings, QR
Once all of the transactions have been processed and each accounts ending balanced has been entered. pc/MRP will calculate the retained earnings for the month by subtracting the ending balances of the expense accounts from the ending balances of the revenue accounts. The retained earnings at the start of the month are copied into the retained earnings at the end of the month. The actual retained earnings for the month are placed in the starting balance of the next month. The reason that the retained earnings for the month are placed in the starting balance of the next month is that the Financial Statement's Trial Balance consists of end of month balance for every account. Since the profits are already reflected in the revenue and expense accounts, the YTD retained earnings cannot reflect the profits for the month again. If you did so, the debits would no longer match the credits for the Trial Balance. Storing the YTD amount in the next months starting balance and the prior month's YTD balance in the end of month balance allows the Trial Balance to balance.
The financial statements selected will then printed out.
The Profit and Loss Income Statement
The General Ledger Income Statement (glincome.frx) uses the chartacc.dbf to sum up and display the following totals for the month being closed:
§ Gross revenue (sum of ending balances of all RN accounts)
§ Cost of goods sold (sum of ending balances of all EG accounts)
§ Gross net profit (gross revenue – cost of goods sold)
§ Cost of labor (sum of ending balances of all EL accounts)
§ Operating Expenses (sum of ending balances of all EN accounts)
§ Net profit before write-offs(gross net profit – labor and operating expenses)
§ Write-off expenses (sum of ending balances of all EW accounts)
§ Net profit before other income (net profit before write-offs – write-offs)
§ Other income (sum of ending balances of all RO accounts)
§ Other expenses (sum of ending balances of all RO accounts)
§ Net profit before income taxes (net before other + other income – other exp)
§ Income taxes (sum of ending balances of all ET accounts)
§ Net profit after income taxes(net profit before income taxes – income taxes)
The Balance Sheet
The asset balance sheet (prdebit.frx) displays the ending balance of all asset accounts. The Liability and equity balance sheet (prcrebit.frx) lists the ending balance of all liability and equity accounts except for the year-to-date retained earning accounts (QR), which lists the starting balance for the next month for that account. The YTD retained earnings for the starting balance of the next month consist of the ending balance for the current month plus the revenue-expenses for the month.
The Trial Balance
The trial balance report (gltrial.frx) displays the ending balance for all charts of accounts except for the year-to-date retained earning accounts (QR), which lists the starting balance for the month for that account. This is because the Trial Balance report includes the Expense and Revenue accounts.
The Year to Date Expense and Revenue Report
The YTD Expense and Revenue report (prytd.frx) list the ending balance of all revenue and expense accounts for the month and the year. With the profit and or loss total for the current month and year at the bottom. The YTD retained earnings is calculated by subtracting the YTD expenses from the YTD revenues.
The General Ledger Report
The general ledger report (prgl.frx) displays the starting balance for the year, the starting balance for the month, the transactions for the month, the ending balance for the month, and the ending balance for the year for every chart of accounts that was debited or credited during that month.
The ending balance for each account is the same amount that is displayed in the Trial Balance and Balance Sheets. The Ending Balance for each account can be calculated by taking its beginning balance, adding its Transaction Totals for each of its sub-accounts.
The YTD Trial Balance Report
The YTD Trial Balance report always displays the ending balance for the month and the YTD. The YTD Ret Earn Trial Balance will always = $0.00 as this report contains the Revenue & Expense account totals for the year.
The Transaction Report
The transaction report (prtran.frx) displays all accounting transactions entered for the month being closed.
pc/MRP will make a backup copy of the chart of accounts data base file named charxxxx.dbf. In addition, pc/MRP will prompt you to make a copy of the chart of accounts data base file on a 3-1/2" floppy disk and label it charxxxx.dbf. For example if you were to close November 2001, the backup file name would be char1201.
14.6.3 Closing a Month in the Future When a Previous Month has Never Been Closed
pc/MRP will not allow users to close a future month were any previous month was not closed correctly. Months must be closed sequentially.
14.6.4 Closing a Prior Month or Fiscal Year where pc/MRP does NOT have a Backup Copy of that Month
If you select to close a prior month and pc/MRP does not have a backup of that month, pc/MRP will warn you that it has no backup copy of that month and then display the backup copies it does have.
14.6.5 Closing a Prior Month or Fiscal Year where pc/MRP DOES have a Backup Copy of that Month
Users can close, re-close, and print financials from any prior month or fiscal year. If you select to close a prior month and pc/MRP has a backup of that month (charxxxx.dbf), pc/MRP will ask if you wish to "Reprint" or "Re-close" the month. Both options allow you to display or print the financial statements.
If users select "Reprint", pc/MRP will only reprint the Financials and NOT adjust starting or ending balances. The chart of accounts for that month will NOT be updated if any GL transaction edits or adjusting transactions were made. The detail on how pc/MRP accomplishes this is listed below.
pc/MRP accomplishes this by creating an empty cursor (file) from the current close (chartacc.dbf) and then populating the cursor account numbers and balances from the backup close (charxxxx.dbf). After printing out the prior period, the cursor will automatically be deleted.
If you select "Re-close", pc/MRP will warn you that after the close, you must re-close every subsequent month up to the current month that has been closed. The detail on how pc/MRP accomplishes this is listed below.
pc/MRP accomplishes this by creating an empty cursor (file). pc/MRP will populate the empty cursor file, by appending the chart of account records from the backup close. In addition, it will append the chart of account records (without their ending balances) from the current close that do not exist in the backup close. pc/MRP will replace the old chart of account descriptions with the current chart of account descriptions.
pc/MRP versions 7.50S and 7.51D and higher will ask if you wish to retain the current budget figures or the budget figures from the last close (this prompt only occurs if there were any changes to the budget figures). pc/MRP 7.50R and lower will retain the budget figures from the old close. pc/MRP will then go through its normal close procedure as described above using the cursor instead of the chart of accounts data base file. Once the financial statements have been printed out, the cursor itself will become the current chart of accounts data base file (chartacc.dbf). pc/MRP will make a backup copy of the chart of accounts data base file named charxxxx.dbf. In addition, pc/MRP will prompt you to make a copy of the chart of accounts data base file on a 3-1/2" floppy disk and label it charxxxx.dbf. You would now have to re-close all remaining months up to and including your current close in order to roll the new balances up into the current month.