Nonprofit Management All-in-One For Dummies

Chapter 13

Closing the Nonprofit Books

IN THIS CHAPTER

Knowing why you need to close the books

Completing year-end entries

Including notes with your financial statements

As you come to the end of your accounting year, you need to wrap up your books for previous 12 months and start the books for the next year. Your fiscal year may be on a calendar year from January to December or some other fiscal 12-month period. No matter when your accounting year ends, you need to close your books and start a new accounting cycle or year. To do so, you have to make some closing entries to certain accounts. Closing your books is an important process because you need to transfer the balance from statement of activities accounts to another account, so that only statement of financial position accounts remains open.

When you close your books, you need to make sure all of your temporary accounts, such as your revenue and expense accounts, have zero balances so revenues and expenses in the next accounting cycle can be properly recorded and closed.

This chapter discusses closing the temporary accounts (revenue, expense, gain and loss), making some of the necessary notes to your financial statements, ...