{m}.{s}.1Introduction

There may well be no actual balancing off of the income and expense accounts in the ledger at the year end. They may well just be ruled off and started again from zero at the start of the next accounting year. This is particularly the case if the accounts are kept in a 3 column format.

Remember however that double entry has taken place even if it has not been written into the ledger.

This figure shows the transfer of the sales for the year (highlighted row).

The other side of this entry will be the credit of the sales in the Profit and loss account.

6000 SALES   20 Nov 2008
2008     Dr Cr Bal
Sept 30 Bal b/f     13,450-
Oct 10 Debtors   1,250 14,700-
Oct 20 Debtors   825 15,525-
Oct 25 Debtors 130   15,395-
Oct 31 Cash   200 15,595-
Oct 31 Profit and loss acc 15,595   0
 
YEAR END
2008          
Nov 10 Debtors   850 850-
[{m}.{s}a]

{m}.{s}.2Computerised ledgers

In computerised ledgers, the year end procedure is run after all the entries have been posted for the old year and the accounts have been drawn up. In the year end routine, income and expense accounts are set back to zero. As we have seen above, there may be no actual double entry shown in the accounts to transfer the balances to the profit and loss account. The income and expense accounts then start from zero in the next accounting year.

The balances will be carried forward in the asset, liability and capital accounts. The net profit (or loss) for the year will be automatically added to or subtracted from the designated Capital account.

 

Computer