Symptom: Unusual journals on the last day of the financial year that reverse on the first day of the following financial year
Cause: Brought Forward P&L Balances
Explanation: Sage requires a year-end routine to be completed. As part of this process, ledger year end transactions are posted to “clear down” P&L accounts and reset them for the following year. Where transactions are posted after the year end has been completed, and the transaction is dated in the prior year, Sage will include this as a brought forward balance. These transactions are therefore included in Sage in the current year despite the transaction being dated in the previous year.
Online software doesn’t usually have a concept of a year-end routine or ledger year end transactions. Any transaction posted will therefore be included in the period of the transaction date.
Check: Generate a “Brought Forward” Trial Balance in Sage. If you see any P&L balances then these are likely to be transactions posted after the year-end routine has been run. They should be the balances seen in the journals and the reversing journals.
Fix: None required. The transactions have been converted into the new system with the same details as those included in Sage. The difference is caused by the way each software handles the transactions.