Closing Accounts

Establishing GL Closing Accounts (FW18 or FW05 )

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:

Please note that what you see on this screen will depend entirely on what your organization set up within Chart of Accounts. For information on setting up your Chart of Accounts, please reference this page: Chart of Accounts Setup

• You can use the Search field to search for the General Ledger account that you wish to modify, or you can expand the categories to display the list of General Ledger accounts.

• Double-click the General Ledger account to display the account record:

• Enter the number of the closing account in the Closing Account field, or click the list icon to the right of the field to select the proper closing account from a list of available general ledger accounts

• Click the Save button on the toolbar to save your changes

Repeat this process for every account that you need to establish closing accounts for.

Defining Closing Accounts via Rules

FundWriter provides an additional method of assigning closing accounts based on a series of customized rules. These rules, established in Closing Account Specifications (FW18), enable your organization to assign closing accounts for portions of the general ledger without having to select them individually using Chart of Accounts Entry. If the account number falls within a certain range, for example, it receives closing account 1234-5678. Or if its second segment is “9999”, closing account 987-6543-21 is assigned.

DDI recommends that your organization set up default closing accounts in Fund Accounting Setup (FW05) to serve as a safety net for any revenue or expense accounts without a specification in Closing Account Specifications. If no specification is made here, FundWriter uses the defaults selected in FW05.

If using Closing Account Specifications, DDI also strongly recommends that your organization not designate closing accounts individually through Chart of Accounts Entry. This may result in the selection of multiple closing accounts for the same revenue or expense account, a condition that produces errors as transactions post to the general ledger.

NOTE: All General Ledger accounts specified in Closing Account Specifications (FW18) must already exist in your organization’s chart of accounts. This application cannot be used to create new GL accounts.

To specify closing accounts for revenue and expense accounts using preset rules, do the following:

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

• Double-click General Ledger Setup

• Double-click Closing Accounts. You will see this screen:

Please note that what you see here will depend entirely on what your organization has already set up for closing accounts.

• Click the New button on the toolbar. This activates the fields for editing

• Select the closing account to assign by typing the account number in the G/L Account field, or by clicking the list icon to the right of the field and selecting from the list of available accounts

• Select the category that you are configuring the closing account for

• In the G/L Segment Selections portion of the window, indicate the individual segment or group of segments for which the closing account will apply. You can type them in each field or click the list icon to the right of the field to select from a list of available segments

NOTE:  If you want to select multiple segments for any account segment field, this 
can be done by clicking the button to the right of the field then clicking the 
Select Multiple button. This allows you to choose more than one segment at a 
time. Or you may instead elect to use pattern matching (click the Pattern Matching 
button). Pattern matching enables you to do the following things:

* Match a single character;
* Match multiple characters;
* Match any of a designated group of characters;
* Match a range of characters;
* Match any characters except those designated to exclude.

• Click the Retain box to the right for any segment where you want to retain the selected segment in lieu of the same segment in the closing-account specification above.

For example, suppose the designated closing account is 1234-567-89 and the selected revenue account is ABCD-EFG-HI. If Retain is checked for the second segment, FundWriter would assign a closing account of 1234 EFG-89 to that revenue account.

• Click the OK button at the bottom of the G/L Segement Selections portion of the window. This adds the specification to the Closing Account Specifications list at the bottom of the window:

• Repeat the steps above for all segments for which you wish to apply Closing Account rules.

• Click the Save button on the toolbar. You will now see the message: "One or more closing account specifications have changed. Re-assign closing accounts to all G/L accounts?":

• Click Yes. This scans all G/L accounts and assigns new closing accounts to those where there have been changes