Hi, i want to ask some question
No. Manager’s Trial Balance takes into account all transactions entered during the defined time period. If you want a trial balance from before any adjustments, create it before making those entries. But be aware; after you make the adjusting entries, the trial balance will change. And remember that the purpose of a trial balance is only to make sure debits equal credits—something that is basically irrelevant with a computerized system. Many accountants have abandoned them.
The answers to questions in your first sentence depend on what you mean by “closing entries” and “closing trial balance.” Manager is a perpetual system. Closing entries are generally not made at all, the way they were in old-fashioned, manual systems. The only adjustments that are sometimes necessary is for allocation of prepaid income or expenses to their correct accounting periods under accrual basis accounting. As described in the Guide you linked to, “closing the books” does not really involve closing anything. That phrase is used only because that is how people have referred to actions at the end of an accounting period for centuries.
I have been using Manager for 7 years and, in one business, I have never taken any of the 5 steps listed in the section titled Closing the books at the end of a year. By coincidence, none of my income or expenses for that business are prepaid, so no adjustments are necessary. The business is a proprietorship, so it operates under the simplified equity accounting described in this Guide: Simplify equity accounting for sole traders / proprietors | Manager. Draws are taken out during the year, not at the end. I don’t need to set a lock date, because no one has access to the accounts except me. I set up reports at the beginning of a new year, not at the end of the old. And I change the period for account reporting as described in the section titled Setting up the next accounting period.
Using Manager requires a shift in thinking. Rather than keeping records for a single year and starting fresh the next year, you are keeping records for the entire life of the business and choosing the time period for which to report results. This was not practical when many accounting practices were developed in the days of manual bookkeeping. Now it is.
Good Morning Tut,
Whilst inpractice I agree with your comments about the system being a ‘rolling’ process, nevertheless the concept of a Trial Balance is still valid, both from the point of view of proving accuracy (See todays news of the GPO paying GBP58 million to try and settle lawsuits related to their buggy accounting systems) but more practically, because striking a balance at a point in time is also intended to let accountants examine the books for any issues that need attending to. I’ve just been reading questions about the basis of depreciation being used, and someone else who had ‘lost’ a bank opening balance.
All kinds of issues can be checked and considered from a TB - the basis used for accruals and prepayments. Do stack values need any write downs? and so forth.
When the adjustments are in, a fresh TB checked for their effect, the period end arrives, and, in my world at least, all prior transactions should be locked from changes. One of my irritations with Manager is the insistence on altering previous transactions. A mistake was made. It’s history. The mistake was found, and corrected - with a journal entry (or another named type of high authority needed transaction) - and the history of the mistake and It’s correction is embedded in the unalterable history. That style of thinking is a major reason for the ascendency of the Sage accounting system, with its internal ship log style of recording absolutely everything that goes on, in an audible manner.
One set of the accounts I run are very very simple, and I could do everything with a couple of dozen journals a year, but M demands all kinds of over complex transaction types. In another set, I bless M for enforcing some rules.
A long post to say that M is, generally an excellent system. If I have a couple of niggles, and would have built in more customisation controls for transaction enforcing rules, then they are small beer compared to the overall benefit of the product.