Confusion in Financial Year Closing

Please be noted that I have joined a Company which has NAV 4 ERP. It has been found that in order to close the previous financial year (05-06) they had not done the proper way of closing the financial year. What they did, they prepared manual vouchers & transferred all balances which required to be transferred through voucher(s). All the customer ledger,trial balance,balance sheet are matching.

If we say in Navision way, the Fianancial year (05-06) is still open.

Now I have to close the financial year(06-07) in NAV 4 & would like to go in proper manner. I want to know the followings :—

  1. Is it necessary to close the previous financial year (05-06). If yes, the balances would get double.

  2. If I try to close the current financial year(06-07), what would be the impact of previous year financial year(05-06) in current financial year(06-07)

Our financial starts from (April-March).

  1. Is it necessary to close the previous financial year (05-06). If yes, the balances would get double.

Yes you must close 05-06. If you had zeroed the profit and loss through balances then nothing will be taken to the general journal to post to retained earnings. If there is something you did not journal everything out you needed too, and therefore the statement was wrong and this will correct it.

  1. If I try to close the current financial year(06-07), what would be the impact of previous year financial year(05-06) in current financial year(06-07)

You cannot close 06-07 whilst 05-06 is open, Navision simply will not let you do it, and therefore there is no impact on 05-06.

thanks Steven for your reply…