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