{"id":2419,"date":"2019-09-30T17:45:28","date_gmt":"2019-09-30T12:15:28","guid":{"rendered":"http:\/\/blog.tenthplanet.in\/?p=2419"},"modified":"2026-03-03T10:13:13","modified_gmt":"2026-03-03T10:13:13","slug":"how-we-can-close-the-balances-and-carry-forward-for-next-financial-year","status":"publish","type":"post","link":"https:\/\/tenthplanet.in\/blogs\/how-we-can-close-the-balances-and-carry-forward-for-next-financial-year\/","title":{"rendered":"How we can close the balances and carry forward for next financial year ?"},"content":{"rendered":"

Books of accounts including vouchers and receipts are required to be maintained under different statutory laws including Income Tax, Companies Act and GST Act.<\/p>\n

The Financial Year in India is from April to March of the subsequent year<\/p>\n

The books of accounts to be maintained includes Records of Sales & Purchases, Records of Assets & Liabilities, Statutory Liabilities, etc<\/p>\n

When the financial year closes, all the necessary book closure entries including prepaid expenses, Adjustment entries, provision entries, depreciation entries as per necessary Acts etc need to be passed<\/p>\n

Adjustment entries are posted based on accrual based of accounting. Revenue & Expenses needs to be recognised for respective financial years. Any advances paid or received need to be adjusted as opening balances or advances for the subsequent financial years<\/p>\n

Some of the items for which adjustment entries are passed as<\/h2>\n
    \n
  1. Closing Stock<\/li>\n
  2. Outstanding Expenses<\/li>\n
  3. Prepaid Expenses<\/li>\n
  4. Accrued Income<\/li>\n
  5. Income received in advance<\/li>\n
  6. Depreciation<\/li>\n
  7. Provision entries<\/li>\n
  8. Bad Debts<\/li>\n
  9. Bank Reconciliations<\/li>\n
  10. Closing Stock<\/li>\n
  11. Adjustment for capital losses carried forward<\/li>\n
  12. Calculation of taxes<\/li>\n
  13. Reconciliation of Statutory Ledgers (GST,TDS)<\/li>\n<\/ol>\n

    The Trail Balance will contain both debit and credit entries & both the ledgers will match<\/h3>\n\n\n\n\n\n\n\n\n\n\n
    Particular<\/b><\/td>\nDebit<\/b><\/td>\nCredit<\/b><\/td>\n<\/tr>\n
    Sundry Debtors<\/td>\nXXX<\/td>\n<\/td>\n<\/tr>\n
    Purchases<\/td>\nXXX<\/td>\n<\/td>\n<\/tr>\n
    Sales<\/td>\n<\/td>\nXXX<\/td>\n<\/tr>\n
    Sundry Creditors<\/td>\n<\/td>\nXXX<\/td>\n<\/tr>\n
    Taxes<\/td>\n<\/td>\nXXX<\/td>\n<\/tr>\n
    Share Capital<\/td>\n<\/td>\nXXX<\/td>\n<\/tr>\n
    Total<\/b><\/td>\nXXX<\/b><\/td>\nXXX<\/b><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

    The difference in the Profit & Loss Accounts will have to transferred to the Reserves & Surplus Account in the Balance Sheet<\/p>\n

    The Accounting entry for posting the transfer entry from Profit & Loss Account to Reserves & Surplus will be as below (if Profit\/for loss it will be the opposite entry)<\/p>\n\n\n\n\n\n
    Particular<\/b><\/td>\nDebit<\/b><\/td>\nCredit<\/b><\/td>\n<\/tr>\n
    Net Profit<\/td>\nXXX<\/td>\n<\/td>\n<\/tr>\n
    Reserves & Surplus<\/td>\n<\/td>\nXXX<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

    The Balance Sheet will contain only items of Assets & Liabilities and the Profit & Loss Accounts will not appear<\/p>\n

    These are the closing balances of the present financial year which will get carried forward as opening balances of the next financial year<\/p>\n

    Once the books of accounts are finalized, in any ERP the books of accounts need to be split\/create a database for all successive financial years<\/p>\n","protected":false},"excerpt":{"rendered":"

    When financial year closes, all necessary book closure entries including prepaid expenses, Adjustments, provisions, depreciation, etc. as per necessary acts need to be passed<\/p>\n","protected":false},"author":23,"featured_media":2513,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[350],"tags":[370,399],"class_list":["post-2419","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-compiere","tag-erp","tag-financial-year"],"_links":{"self":[{"href":"https:\/\/tenthplanet.in\/blogs\/wp-json\/wp\/v2\/posts\/2419","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/tenthplanet.in\/blogs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/tenthplanet.in\/blogs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/tenthplanet.in\/blogs\/wp-json\/wp\/v2\/users\/23"}],"replies":[{"embeddable":true,"href":"https:\/\/tenthplanet.in\/blogs\/wp-json\/wp\/v2\/comments?post=2419"}],"version-history":[{"count":0,"href":"https:\/\/tenthplanet.in\/blogs\/wp-json\/wp\/v2\/posts\/2419\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/tenthplanet.in\/blogs\/wp-json\/wp\/v2\/media\/2513"}],"wp:attachment":[{"href":"https:\/\/tenthplanet.in\/blogs\/wp-json\/wp\/v2\/media?parent=2419"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/tenthplanet.in\/blogs\/wp-json\/wp\/v2\/categories?post=2419"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/tenthplanet.in\/blogs\/wp-json\/wp\/v2\/tags?post=2419"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}