You are using to trial balance on a monthly base to validate balance sheet g/l account balances against profit and loss (P&L) accounts in order to decide on adjustment postings. After that you expect ending balances in the trial balance to tally. This works for all periods of the fiscal year so far. However, you notice that in the first period of the new fiscal year you do not see an opening balance for the relevant P&L-account. This cannot be explained by transactions as recorded in the g/l account line items for the relevant periods since a balance carryforward has not been conducted yet for the relevant fiscal year.
Transactions and balances of a balance sheet account (e.g. deferred cost of goods sold) are compared and cleared against a P&L-adjustment account. The column Opening Balance Company Currency for the P&L account shows a value of 0,00.
Reproducing the Issue
- Go to General Ledger work center.
- Navigate to Reports view and List.
- Select the report Trial Balance with the relevant parameters including the first period of the fiscal year.
- Enter the relevant g/l accounts (e.g.: deferred cost of goods sold and P&L adjustment account) and run the report.
- Compare the values in the column Opening Balance Company Currency.
P&L-accounts are usually cleared during the year end procedure. This is considered in the trial balance even if the balance carryforward run has not been performed yet. Since it is technically incorrect to assume an opening balance in the first period of the new fiscal year, a balance carryforward is anticipated and notionally conducted when employing the trial balance for this month.
When conducting comparison and clearing scenarios, an opening balance for a P&L-account cannot be assumed for the first period of a fiscal year. As a workaround the last fiscal year's ending balance can be used alternatively for calculation purposes. Another option would be the usage of a balance sheet account with continued balances.
KBA , balance carryforward , trial balance , opening balance , SRD-FIN-COR , Cost & Revenue , How To