Year end
GinaH
Member Posts: 2
Hello,
Is there a way to close a fiscal year end so that income statement balances are not carried forward to a subsequent fiscal year?
in Using Wave
0
Comments
@GinaH,
Income statement balances may appear to have an opening balance when looking at the account but they do not. What you are seeing is required to be maintained in order to reflect accurate records. Every transaction from inception remains in the accounts. For if it didn't, balances on the balance sheet would be incorrect. For a simple example, I charged 100 to office supplies in 2021. Off ice expense in 2021 would be 100 and there is a liability of 100 (I charged it). In 2022, I paid the card. If I call up the account balance for office I would see the 100 as the opening. However, with no charges in 2022 I would not have an account change nor an amount on the 2022 income statement. If the 100 were removed, I would have a negative 100 on the balance sheet rather than a zero balance. In addition, you would never be able to run a comparative statement. Hope that helps with the concept.
@Mikeg
Thank you for your response. It was just strange to me not having an end of year process and seeing a transfer to retained earnings in the nominal accounts. I dug a little further into the app and found that you are indeed right. Thank you again.