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Closing the Fiscal Year

At the end of each fiscal year, you'll need to close out the year's financial activity so that a fresh period can begin. Closing the fiscal year is how Revela finalizes an entity's income and expenses for the year and rolls those balances into the entity's long-term equity. This article explains what happens when you close a fiscal year and walks you through the process.

What Happens When You Close a Fiscal Year

When you close a fiscal year, Revela sweeps all revenue and expense account balances into retained earnings, which is the account that tracks a entity's cumulative net income across all years, rather than just the current one. This sweep happens automatically, effective on the last day of the period you're closing.

Revela performs this sweep for both accounting bases used on the platform: accrual basis (which recognizes income and expenses when they're earned or incurred, regardless of when cash changes hands) and cash basis (which recognizes income and expenses only when cash is actually received or paid). Because both bases are swept independently, your accrual and cash-basis reporting will each reflect a clean starting point for the new fiscal year, without affecting the other.

How to Close a Fiscal Year

To close a fiscal year, follow the steps below:

  1. Navigate to Accounting > Journals.
  2. Select the journal for the property or portfolio whose fiscal year you're closing.
  3. Select Actions > Close Fiscal Year.

Once submitted, Revela will sweep the journal's revenue and expense balances into retained earnings as of the last day of the fiscal period.

Tips & Best Practices

  • Before closing a fiscal year, confirm that all transactions for the period have been fully reconciled and posted. Once revenue and expense balances have been swept into retained earnings, correcting an error in a closed period is more difficult than catching it beforehand.
  • Check for miscategorized transactions and review your financial statements (income statement, balance sheet, cash flow) on both accrual and cash basis.