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How to use Income statement closing journals functionality?

in General Ledger & Intercompany 5 comments

Summary:

We have a requirement of generating Income statement closing journals. We have enabled the same at ledger options and after that generated the journals using the ESS 'Create Income Statement Closing Journals'.


Content (required):

I have below questions regarding this functionality -

  • Do we need to reverse these journals? The category used in these journals by default is marked for auto reversal.
  • As we have enabled the closing journals at ledger options, will the system stop transferring balances to retained earnings at balance level?

While testing this functionality, I have observed that even though closing journal option is enabled, and I have generated (not posted) the Income statement closing journal, upon opening the next period (new year) balances from PnL accounts still got transferred to Retained Earnings account.

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