Year End Close & the Inactive Account Myth

This was a blog I was planning on writing earlier this year but the topic had slipped my mind. Earlier today I was browsing the forums at GPUG and one thread reminded me of this topic so I figured today’s a good time to get this post written while it’s fresh in my mind.

The Myth

The myth I’ve heard more than a few times now is some variation of “All accounts must be active during year end close.” As the story goes, if you have inactive accounts that have activity in a year (P&L accounts for example), the myth is in Dynamics GP you need to re-activate the GL accounts prior to year end close.

The Reality

The only GL accounts that need to be active for the Year End Close routine to work are the Retained Earnings account(s) that you have specified in General Ledger Setup (including the divisional accounts if you close by divisions). I’ve tested this on GP 2016 for the purposes of this post but I also tested this on GP 2013 on a client’s own test company data too. Another user commented that they know this is fine on GP 2010 as well. It could very well be that at some point, in some version of Dynamics GP, accounts had to be active for year end close. If that is the case, I have honestly never run into that issue at any client I’ve worked with before which is why I wanted to dispel the myth.

Some Proof

It’s a good thing Fabrikam Ltd. has several open years by default! This allows us to easily test a year end close with sample data, without a lot of effort. In my case, on GP 2016, Fiscal 2014 is open (and everything after that) so that’s what I worked with.

Test 1 – Inactivate every account, then try the Year End Close

I went to the extreme to keep it simple. I went into Mass Modify and inactivated every GL account! Crazy!

Here’s a snapshot of part of the Trial Balance Summary report that shows some balance sheet accounts, including Retained Earnings, and some profit and loss accounts – all with balances, all inactive.

YEC pic 1 inactive tb

Then I went into the Year End Close window and did nothing but click the Close Year button. Here’s the window, followed by the error message warning me that the Retained Earnings account is inactive. Notice that has no “continue” option – that account needs to be active to continue.

YEC pic 2 year end close window

YEC pic 3 retained earnings acct inactive

Test 2 – Re-activate Retained Earnings, and try Year End Close again

This time, I received a different message, but it’s purely a warning. This says “at least one balance sheet posting account or unit account is inactive and had a balance. Do you want to continue?”. Click Continue to proceed, as this is just a warning.

YEC pic 4 warning

Voilà, success!

YEC pic 5 complete

Here is one last pic which is the 2015 TB summary for the same range of accounts. The opening balances are all updated as expected for the amounts that were the ending balances of the 2014 year, even though the accounts are inactive.

YEC pic 6 tb after

Hopefully that dispels this myth for you and has the added benefit of making your year end go a little faster, now that you don’t have to activate accounts, and remember to inactivate them again afterwards!

(originally posted on www.kuntzconsulting.ca, and migrated to this site in October 2017)

2 thoughts on “Year End Close & the Inactive Account Myth

  1. Reply
    Sherry Whitten - February 8, 2017

    In our experience, if we have an account that is inactive and has no activity, GP deletes it automatically during year end close. If the account had a budget amount for some prior year(s), reports for budget then do not include all the budget amounts, since the account got deleted. GP doesn’t check to see if it has a budget amount before deleting it. Is that your experience?

    1. Reply
      Jen Kuntz - February 8, 2017

      Hi Sherry,

      It depends on your version of Dynamics GP. Starting with GP 2013 (or perhaps prior, I can’t recall exactly), the year end close window gives you complete control over this behaviour. If you leave “Maintain Inactive Accounts” unchecked, that tells the process to go ahead and delete accounts with zero balance but if you check that box, it will not delete them, and gives you the further option to define whether you want to only keep those with budgets or all inactive accounts.

      Hope this helps.
      Jen

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