Two adjustment entries will be necessary so to carry the in/out funds into the next year.
- Post an expense adjustment in the current fiscal year. Example: At the end of the fiscal year, more income has been received in the In/Out account than has been paid out. To adjust for this, enter a negative expense adjustment to bring your account to a zero balance. See the example below.
- After starting the new fiscal year, another expense adjustment must be made to reverse the expense adjustment at the end of the previous fiscal year. Enter an expense adjustment that is the exact opposite of the previous expense adjustment. In the example, enter a positive expense adjustment to bring the expense account balance back to what is was before posting the first adjustment. See the example below.
There are cases when you would not want to zero out an In/Out account. For example, funds are collected to pay for camp. You did not, however, collect enough to cover the whole cost of the camp fees. It is likely that you will never be reimbursed for this expense. In this case, you would not want to enter the adjustments as shown here.
If you do not want to carry forward the balances in your In/Out account, there is only one thing you need to do. Use a transfer entry to zero out any funds in your In/Out internal accounts. Any expense In/Out accounts will automatically reset to zero at the start of the new fiscal year.
End of Fiscal Year Adjustment for In/Out account with a negative balance.
Beginning of Fiscal Year Adjustment for In/Out account with a negative balance.