Posting transactions after year end

Posting transactions after year end

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We process the bookkeeping for a number of companies and a discussion always arises as to the correct posting method for information provided after the year end, but relating to before the year end.

Our client's year end is 31 March, we process the monthly bookkeeping and are in the process of preparing draft accounts. The year end process hasn't been run yet and the client has now provided information pre March 31st.

My old boss said to post as at 1st date of the following accounting period (whether or not the year end had been run) but my current boss says no! My inclination is to post the information at the correct dates and rerun the draft accounts as the year end has not been run nor the accounts prepared, thus preparing the accounts as accurately as they should be.

Can anyone provide the correct procedure for posting post year-end transactions

1)  when the year end has been run,

2) before the year end has been run,

3) when accounts have been prepared

4) before accounts have been prepared

or any other combinations.

Thanks

Replies (3)

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By petersaxton
15th Jul 2011 19:08

I'd get it as correct as possible even if it takes time

Your accounting software has to agree with your statutory accounts balance sheet.

If you have not finalised the accounts and not run the year end then make the normal entries.

If you have not finalised the accounts but you have run the year end then make the normal entries if they affect the balance sheet but anything that should be P&L enter them on Revenue Reserves.

If you have finalised the accounts then make sure your entries agree to the balance sheet. If you have not run the year end you can put entries to P & L but if you have run the year end you should put entries to Revenue Reserves instead.

I agree with you about trying to get the accounts as accurate as possible.

Some people think that if you have reported a period you should stay with that period and anything wrong with that period should be put in the next period not reported.

My view is that unless everybody knows what they are doing regarding accruals etc then you will end up with every periods accounts being wrong and total nonsense. You’d be better off getting each periods accounts right eventually and have some meaningful figures to consider.

Obviously you can't do that once you have finalised the year end accounts.

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Euan's picture
By Euan MacLennan
16th Jul 2011 12:14

It depends on your software

You presumably need to "run the year-end" when you need to start doing the book-keeping for the new year.  If that necessity pre-dates the preparation of accounts, so be it.

If you have half-decent software (TAS Books for one), you post the accounting adjustments into the old year and update the balances carried forward, thus getting the book-keeping system to agree with the final accounts.

If your software does not allow you to post into the old year (Sage, perhaps?), you have no option but to post the old year's accounting adjustments as on the 1st of the new year.  As Peter says, in this case, you net off all the P&L adjustments and post them to the P&L balance brought forward.

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By Darren Loring
17th Jul 2011 22:39

Materiality

Hi

It depends if the transactions would make a material adjustment to the accounts (and tax) or not - a judgement call really, of not material then post as 1st day of the new year (and make a note why this was done).  If material then amend the year-end accounts.

 

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