Closing Accounts

Overview

A closing account is a General Ledger account, usually in either the “Liabilities” or “Fund Balances” category, to which revenue and/or expense accounts will close at year end. FundWriter has a unique closing-account feature wherein these accounts maintain running balances of closing activity (all revenue and expense transactions that have posted and will eventually close). This facilitates rapid net revenue and fund balance calculations for reporting.

Revenue or expense transactions do not consist of a simple entry to an asset account and an offsetting entry to a liability account. When FundWriter posts a debit or credit to a revenue or expense account, the same transaction is posted as closing activity to the appropriate closing account. If a credit has been made to a revenue account, for example, a credit for the same amount is made to the closing account designated for that revenue account.

All revenue and expense accounts must have designated closing accounts in the FundWriter system. This can be accomplished in three ways:

• By establishing default closing accounts to apply across all revenue and expense transactions (if using fund accounting, these defaults must be defined for each fund);
• By setting closing accounts for individual revenue and expense accounts;
• By assigning closing accounts using a set of rules.

These three methods are described below. Which method or combination of methods your organization elects to use depends upon its business practices and the make-up of its General Ledger.

NOTE: Your organization must specify closing accounts for all revenue and expense accounts in the General Ledger. If you have not specified closing accounts for some, FundWriter may produce errors during the course of posting transactions to the General Ledger.

Default Closing Accounts

The simplest method of establishing closing accounts for revenue and expense transactions is to set a master closing account to apply to each type of transaction. In other words, no matter what General Ledger accounts are involved in the transaction, any revenue or expense transaction results in corresponding activity in the closing accounts specified. In FundWriter this may be done through Fund Accounting Setup.

NOTE: If your organization uses fund accounting, default closing accounts must be designated for each fund

Follow the steps below to set overall default closing accounts for all revenue and expense transactions:

• From the DDI Connect main menu, double-click FundWriter

• Double-click General Ledger Setup

• Double-click Fund Accounting Setup. You will see this screen:

• If your organization uses fund accounting, enter a fund ID in the Fund field, or click the list icon to the right of the field to select from a list of funds. Press Enter to continue. This will enable the fields on the Closing Accounts tab for editing

• If your organization does NOT use fund accounting, click the Edit button on the toolbar. This will enable the fields on the Closing Accounts tab for editing

• You can type the appropriate General Ledger account in each field, or click the list icon to the right of the field to select from a list of available accounts

NOTE: If you enter an account in one closing account field but not the other, FundWriter saves the same account in both fields. If you have selected an account in either closing-account field that is not in the Liabilities or Fund Balances category of the GL, FundWriter produces an error. However, it proceeds to save the selection.

The Closing Revenue and Closing Expense account balances are transferred to the account specified in the Fund Balance field during the year-end-close process.

If your organization has enabled fund accounting, repeat this process for each fund to specifiy closing accounts.

Setting Closing Accounts by Individual Revenue/Expense Account

In some cases it may be necessary to select closing accounts based on the individual revenue or expense accounts affected by a transaction. This can be done in FundWriter through Chart of Accounts Entry. This method of closing- account selection can be used in tandem with default closing-account setup, described above. When both methods are used, default setup is the foundation, with individual closing-account selections used when present.

To select a closing account for an individual revenue or expense account:

• From the DDI Connect main menu, double-click FundWriter

• Double-click Setup

• Double-click Chart of Accounts Entry. You will see this screen: