Content courtesy of IQ Retail (Pty) Ltd Training department https://www.iqtraining.co.za/

General description

This document explains the IQ Enterprise / IQ Business (IQE/IQB) Year End procedure.

The Year End function in IQE / IQB has been removed. Reasons being all ledger

information is kept in their own ledger transaction tables. This means that all

transaction that are processed through the system with specific dates, whether it be

for a previous year or previous month the system will process those transaction into

their respective ledger transaction tables. Year end is now an automated procedure

which are the same as debtors and creditors month end rollovers.

Year end backups

Although the Year end option has been removed from the IQE / IQB system; this does

not mean that backup procedures should not be performed. Backups are still an critical

part to avert business risk. Backups are made via the Backups option found in the

Utilities section. Failure to perform backups can result in all the information on the

system being lost. It is also advisable to make use of cloud backup solutions such as IQ

Irontree.

Financial reports

There are four statements that are critical in any set of annual financial statements

namely:

1.) Income /Profit and loss statement – Statement of comprehensive income.

2.) Balance sheet – Statement of financial possession.

3.) Cash Flow Statement – Statement of cashflow.

4.) General Ledger - Trial balance

Year end conclusion

IQE/IQB will calculate your Retained Earnings based on what was configured as your

financial year end date.

Each financial year, IQE / IQB automatically transfers your net profit to Retained

Earnings ledger account.

In other words; each financial year end, IQE / IQB will zero all of your income and

expense accounts and posts the closing balances to Retained Earnings ledger account

for the next financial year.

Income statement will reflect nil balances for all the income and expense accounts.

Balance Sheet statement will have opening balances at start of the financial year for

retained earnings and balance sheet accounts.

Definitions

Gross profit

Gross profit is defined as net sales minus the cost of goods sold/cost of sales.

Net profit

Net profit means a company’s net sales minus all expenses. This is not only the

inclusion of cost of sales, but also operating and non-operating expenses. Such as

salaries/water and electricity etc.

Retained earnings

Retained earnings (RE) is the amount of net profit left over for a business after it

has paid out dividends to its shareholders. A business generates earnings which

can be positive (profits) or negative (losses). Positive profits give a lot of room to

the business owner(s) or the company management to utilize the surplus money

earned. Often this profit is paid out to shareholders, but it can also be re-

invested back into the company for growth purposes. The money not paid to

shareholders is retained earnings.