Accounting Period
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An Accounting Period is a period for which books are balanced and the financial statements are prepared. Generally, the Accounting Period consists of 12 months. However, the beginning of the accounting period can differ.
An Accounting Period defines a Fiscal Year (FY) within the Xoro system. A company’s fiscal year is used for accounting purposes and may not align with a calendar year. An Accounting Period containing a particular date must be created if a transaction is to be generated on that date. Use the ‘Accounting Period module’ to create and edit the fiscal years.
Please Note: If the Accounting Period is not created for the upcoming Year, the system will not allow you to post any transactions in the new Fiscal Year.
It will give you an error message saying “Cannot complete the request. No accounting period defined for given transaction date. Transaction cannot be completed”.
Accounting Periods function as fiscal years in Xoro. You can create them with sub-periods so that you can lock those sub-periods when you’re closing them (e.g. doing month-end). In XoroERP, you can create yearly, quarterly, or monthly sub-periods.
If you want to create a transaction for a specific date, then an accounting period for it must exist. This is why every fiscal year you need to make sure the next upcoming accounting period exists.
To create the accounting period for a new year, click on "Create New Year" and fill in the essential details on the "Create Fiscal Year" page.
Fiscal Year
Select the year for which you want to create the accounting period.
Sub-Period
Select how often you want to review your financial data within an accounting period (Year, Month, or Quarter).
No. of Periods
This field will display the number of periods in an accounting period, determined by the sub-period you've chosen. If you select 'Year,' there will be 1 period; for 'Month,' there will be 12 periods, and for 'Quarter,' there will be 4 periods.
Start Date
Select the date that marks the beginning of the accounting period.
Once you have filled in the details, click on "Create" to create the accounting period.
End Date
This field displays the date that marks the end of the accounting period.
Periods
This field displays the number of period in an accounting period.
Period Code
This field displays the unique code assigned to the accounting period.
Start Date
This field displays the date that marks the beginning of the accounting period.
Status
This field displays the status of the accounting period. An accounting period can be 'Open' or 'Closed'. An open accounting period is one that is currently active and allows for financial transactions to be recorded, adjusted, or closed. A closed accounting period is one that has ended, and no further transactions or adjustments can be made to it.
Sub Period
This field displays the chosen sub-period for the accounting period.
Year
This field displays the year of the accounting period.
Closing journal entries are made at the end of an accounting period to prepare income statement accounts for the next period. This is because income statement accounts are measured periodically, and so the amounts in one accounting period should be closed or brought to zero so that they won’t get mixed with those of the next period.
Closing transactions will reset the P&L accounts to zero and move the net income to the retrained earnings account.
Note: This process is called Fiscal Year End in Xoro
Income Statement accounts consist of all revenue and expense accounts. Take note that closing entries are prepared only for temporary/income statement accounts. Permanent accounts are never closed.
Note: If you do not do the fiscal year-end process at the end of the period, the net income will not be moved to the retained earnings account and the balance sheet will show consolidated income from previous years.
In the "Period End Closing" module, choose the fiscal year and the retained earnings account.
Next, select "Calculate Closing Transactions" to review all the transactions completed during that year in the section below.
Finally, click on "Close Period" to formally conclude the accounting period.
You are trying to post a transaction and getting this error: “Accounting Period is in locked/closed…”.
This error generally occurs when you are trying to do a transaction in a closed or locked Accounting Period. For instance, you are trying to make changes to older Invoices from a previous Fiscal Year or a locked period of this Fiscal Year.
How to resolve this issue?
You can create the Accounting Periods with sub-periods so that you can lock those sub-periods when you’re closing them (e.g. doing month-end).
The system does not let you do any transaction in the locked Accounting Period.
To be able to do the transaction, you have to unlock the sub-period which relates to your transaction. You can do this from the Accounting Periods module. Here’s how:
Navigate to the ‘Accounting Periods’ module.
Double-click on the Accounting Period for which you want to unlock the sub-period.
An Accounting Period Details window will pop-up.
Uncheck the respective box under “Lock Action” column to unlock the period.
Now, you should be able to do the transaction.
As an accounting practice, the Fiscal Year is closed at the end of the FY.
Once the FY is closed, the system does not let you post transactions in the closed period as the books are already closed and you might not want to change the closed balances.
To be able to do the transaction, you have to re-open this Closed Accounting Period from the Accounting Period module. Here’s how:
Navigate to the ‘Accounting Periods’ module.
Right-click on the year you want to reopen.
Click on the option, ‘Re-open Closed Accounting Period’.
Press OK to continue.
Now, you should be able to do the transaction.
