Year-End Final Entries

What Final Entries Are

Through the year you record what actually happened — sales, purchases, receipts, payments. Final entries are what you add at 31 March to make those records tell the truth about the year: the wear on your assets, the March rent you owe but haven't paid, the income earned but not yet received, the tax you'll have to pay on the profit.

Skip them and your Balance Sheet is wrong in predictable ways: assets overstated, liabilities understated, profit too high. iAccounting's Year-End Finalization screen walks you through all of them, does the arithmetic-heavy ones itself, and keeps a record of how far you've got.

Open the Screen

1. Open the 🤖 Auto Accounting menu.
2. Click 📅 Year-End Finalization (Final Entries)…

A company must be open. The window has three tabs — Finalization Checklist, Auto Entries and Cash Flow — and a progress line reading "Finalization progress: n of 13 done" against the financial year you're closing.

The Order to Work In

The tabs aren't in the order you should use them. Work like this:

The reason tax comes fourth is simple: the provision is a percentage of net profit, and every entry above it changes net profit. Compute tax first and you'll be provisioning against a number that's about to move.

Step 1 — Cash Flow Review

Before adjusting anything, check the year holds together. Open the Cash Flow tab and you get a month-by-month table: inflow, outflow, net and closing balance across all your Cash and Bank ledgers.

What you're hunting for is any month where the balance goes negative. Physical cash cannot be negative, so a negative month is always an error — nearly always a receipt dated later than the payment it funded, or a cash-in entry never recorded at all.

Select a row and press Enter, or double-click it, to open the Cash/Bank ledger for exactly that period and find the culprit. With more than one cash or bank ledger you'll be asked which to open. Fix the entry, then click Re-run Cash Flow.

Do this first. Every later step builds on these numbers.

Step 2 — Depreciation (Computed for You)

Open the Auto Entries tab. The top half is your depreciation schedule, one row per asset, showing method, rate, opening WDV, additions, depreciation for the year and closing WDV.

If it's empty, click 🏢 Fixed Assets… and build the register — for each asset: its name, the Fixed-Assets ledger to credit, method (WDV or SLM), rate %, opening written-down value, cost and salvage for SLM, plus any additions or disposals during the year. This is a one-time setup; afterwards it rolls forward each year.

Then ↻ Recompute. The engine applies the rules you'd apply by hand:

• WDV — depreciation = rate % × opening written-down value, on the block after disposals, plus rate % on additions.
• SLM — rate % × (cost − salvage), floored so the written-down value never falls below salvage.
• The 180-day rule — an asset put to use in the second half of the year gets half the rate. Those rows show a ½ next to the method.

The green summary line gives the total. Click ✅ Post Depreciation Journal and the draft opens in the same review dialog the AI assistant uses — one Journal, Dr Depreciation for the total, Cr each asset ledger for its share. Check it, approve it, and the checklist's Depreciation item ticks itself.

Step 3 — Provisions & Adjustments

Click 📝 Provisions & Adjustments… for the entries where you supply the amount and iAccounting supplies the accounting. One grid, one row per adjustment — pick the kind, the head or party, and the amount:

• Outstanding expenses (the March rent, salary, electricity you owe)
• Prepaid expenses (the portion that belongs to next year)
• Accrued income (earned, not yet received)
• Income received in advance
• Bad debts and provision for doubtful debts
• Interest on capital and on drawings

Each row becomes the correct Dr/Cr Journal, and all rows post together through the same review-and-approve dialog. You never have to remember which side of which entry — you just supply the figures.

Step 4 — Provision for Income Tax

Back on the Auto Entries tab, at the bottom. Enter your rate (it starts at 25%) and click Compute. iAccounting reads net profit before tax from your accounts and shows the arithmetic — "Net profit ₹… × 25% = provision ₹…".

If profit is nil or negative it says so and there's nothing to provide. Otherwise click ✅ Post Tax Provision — Dr Income Tax, Cr Provision for Tax — through the usual review dialog.

Only do this once depreciation and provisions are posted. Both reduce profit, and therefore the tax.

Step 5 — The Entries You Post Yourself

Not everything can be computed. The checklist gives you the exact Dr/Cr for the rest — select any item and the panel on the right shows its posting guidance and a suggested narration. Post them from Transactions → Journal Voucher (F7):

• GST payable set-off — Dr Output CGST/SGST/IGST, Cr Input CGST/SGST/IGST, Cr GST Payable for the net.
• TDS / TCS payable — Dr the expense or party, Cr TDS Payable.
• Close to P&L; net profit to Capital — transfer indirect expenses and incomes to P&L, then Dr Profit & Loss, Cr Capital or Reserves for the net profit.

Closing Stock — Read This Before Posting Anything

This one deserves its own section, because getting it wrong doubles a number on both statements.

If you maintain stock items in iAccounting, do not post a closing-stock journal. The Balance Sheet and P&L already value your closing stock from the inventory records and fold it in automatically — you'll see a Closing Stock row on both without doing anything. Post a manual entry on top and the P&L counts it twice.

The checklist's closing-stock guidance (Dr Closing Stock under Current Assets, Cr Closing Stock in the Trading A/c) is there for accounts-only books — companies that don't track stock items in the software and therefore have no automatic valuation to rely on. If that's you, post it; otherwise tick the item off once you've confirmed the automatic figure is right, and post nothing.

Either way, check the Closing Stock figure on your Balance Sheet against your physical stock statement before signing off. If you use the Tally connector, a pull also captures Tally's own per-item valuation so the two systems agree to the rupee.

The 13-Point Checklist

The first tab is the master list, in posting order. Click any item to read its Dr/Cr guidance on the right; tick it when it's done.

1. Cash flow review
2. Closing stock valuation
3. Depreciation on fixed assets (WDV)
4. Outstanding / provision expenses (March)
5. Prepaid expenses
6. Accrued / outstanding income
7. Income received in advance
8. Bad debts & provision for doubtful debts
9. GST payable set-off (output − input)
10. TDS / TCS payable provision
11. Interest on capital / drawings
12. Provision for income tax
13. Close to P&L; net profit to Capital

Your ticks are saved per company and per financial year, so you can close the window, come back next week, and carry on where you left off. Posting depreciation or the tax provision ticks its own item automatically.

Not every item applies to every business — a proprietor with no fixed assets and no stock will legitimately skip several. Tick them anyway once you've considered and dismissed them; the value of the list is that you decided, not that you posted.

Learn from Last Year

If you closed last year in iAccounting, click 📚 Learn from Last Year… on the Auto Entries tab. Point it at last year's company file and it reads that year's closing Journals and proposes the same entries for this year — same heads, same groups, same narrations, with last year's amounts as a starting point.

They open in the normal review dialog so you can correct every figure before posting. Last year's file is opened read-only and never modified.

For a business whose closing entries barely change from year to year, this turns an afternoon into a few minutes. Just don't let familiarity carry a stale amount through — change the figures, don't just approve them.

Roll Assets Forward — Last

Once the depreciation Journal is posted, click ⏭ Roll Assets to Next Year. Each asset's closing WDV becomes next year's opening WDV, and this year's additions and disposals are cleared.

Only after posting depreciation. Roll first and you lose the opening figures the calculation needs. The confirmation says so, and it's worth reading — this one is awkward to undo.

Verify Before You Sign Off

1. Trial Balance balances (F4) — Dr equals Cr.
2. Balance Sheet balances — assets equal liabilities plus capital.
3. Closing stock matches your physical stock statement.
4. Every fixed asset's closing WDV on the schedule matches its ledger balance after depreciation.
5. Cash never goes negative — re-run the Cash Flow tab one last time.
6. Bank balances agree with the closing statement — see Bank Reconciliation.
7. Checklist reads 13 of 13, with anything skipped skipped on purpose.
8. Take a backup — File → Backup Now — and keep it with the year's returns.

Then run Books Audit (Ctrl+Shift+A) for a final sweep, and check Unbalanced Vouchers is empty.

What's Next?

• Bank Reconciliation — tie your bank balances out before closing
• Tally Connector (Live Sync) — hand the closed year to your CA in Tally
• Financial Statements — what the closed books actually say