Balance Brought Forward (BBF) Journal Entry in Dynamics GP

Both customer and support boards have raised an interesting question several times over the last few months about Balance Brought Forward (BBF). So, I thought it was good time for a review!

We recognize that Dynamics GP does not allow you to create your financial reports when you have two or more open fiscal years unless you run the Year End Rollover Process first for the older fiscal periods. This has frustrated Dynamics GP users since the beginning of time. The only exception is that you are able to produce Income Statements without first running the Year End Rollover Process. Any of the other financial reports would require some customizations or specially designed reports in order to skip first running the Year End Rollover Process of that older open year.

For some companies, the information is not available for many months into the new year that would allow them to roll over the previous year.

To facilitate our understanding of this issue, we must first remember that Dynamics GP is based on Double-Entry Accounting – developed in the 13^th century. Basically, it ensures that every transaction will sum to $0.00, Debit(s) = Credit(s).

Financial Reports

Financial Reports are comprised of the four core reports – Income Statement (P&L), Balance Sheet, Statement of Cash Flow, and Statement of Owners Equity. Corporations may also require a Statement of Retained Earnings.

Retained Earnings are a key component of financial statements, particularly in the Balance Sheet and Statement of Retained Earnings. Depending on your business type, Retained Earnings and Owner’s Equity are basically the same thing. Retained Earnings are used by corporations whereas Owner’s Equity is used by sole proprietors.

The Balance Sheet report provides a snapshot of a company’s financial position at a specific point in time. Retained Earnings are listed under the Shareholders’ Equity. This represents the cumulative amount of net income that a company has retained since the company’s inception. This does not represent the amount distributed as dividends. The basic equation for the balance sheet is:

Assets = Liabilities + Equity

In the equity section, Retained Earnings are added to other components of equity, such as paid-in capital and common stock, to calculate the total Shareholders’ Equity.

The Statement of Retained Earnings shows the changes in Retained Earnings over a specific period. It typically includes:

• Beginning Retained Earnings: The Retained Earnings balance at the start of the specified period.
• Net Income (or Net Loss): The company’s profit or loss during that period.
• Dividends Paid: The amount of earnings distributed to shareholders.
• Ending Retained Earnings: The Retained Earnings balance at the end of the period.

The formula for calculating the ending Retained Earnings is:

Ending Retained Earnings = Beginning Retained Earnings + Net Income – Dividends Paid

Back to Dynamics GP

In Dynamics GP, the Account Maintenance card requires you to define a Posting Type of “Balance Sheet” or “Profit & Loss” for each account. The Dynamics GP system does not use the natural account structure to define “Profit & Loss Accounts” or “Balance Sheet” Accounts.

The “Posting Type” setting is located on the Account Maintenance card and defines how the account is treated in the Year End Rollover Process.

So, what does the Year End Rollover process do?

1. Creates a new General Journal entry for the next fiscal year with:
   • Takes the total sums of all Profit & Loss accounts and rolls them up into the Retained Earnings Account [SOURCDOC] = “P/L”. (Binary Stream’s Multi-Entity Management will do the same for each Entity.)
2. Creates an entry for each of the Balance Sheet Accounts, for their starting balance at the beginning of the new fiscal year [SOURCDOC] = “BBF”
3. Moves all transactions for the fiscal year you are closing to the GL history table (GL30000) from GL open table (GL20000)
4. Optional – You can create a new starting Journal Entry Number
   • Some companies like to have their Journal Entry Numbers starting with a new number in a new year
   • The Journal Entry field is a <int> so you are limited to a max number = 2,147,483,647
5. The Year End Balance Process does NOT clear out UNIT Accounts – these are treated like a “Balance Sheet.” If you do not want Unit Account balances brought forward, you will need to manually remove them.
   • You need to remove Unit Accounts via SQL. These SQL statements will help you. [ACCTTYPE] = 2 are Unit Accounts.
   • You will need to run Utilities >> Financial >> Reconcile to clean up the summary tables after you run the SQL statements.

-- OPEN GL

DELETE GL20000

FROM GL00100, GL20000

WHERE GL00100.ACTINDX = GL20000.ACTINDX

and GL00100.ACCTTYPE = 2

and GL20000.SOURCDOC = 'BBF'

-- HISTORY GL

DELETE GL30000

FROM GL00100, GL30000

WHERE HSTYEAR = 'XXXX'

and GL00100.ACTINDX = GL30000.ACTINDX

and GL00100.ACCTTYPE = 2

and GL30000.SOURCDOC = 'BBF'

I’m sure you’re thinking ‘This is all nice Kerry, but how do I get my work done so my bosses get the information they want, and I look like a Rock Star and not a rock?’

There are a few tricks and work arounds in Dynamics GP that can help you manage your financial statements during this transitional period of time between your fiscal years. You will need to determine which solution works best for your company and situation. Consult your partner for additional advice.

Roll Over the Year Sooner

Dynamics GP allows you to post to all open years, and the most recent historical fiscal year. This has been allowed for many years.

To be able to post to the most recent historical fiscal year, you need to have a few settings enabled in the system.

1. Enable the option Allow: Posting to History in the General Ledger Setup window
2. Ensure the posting period is OPEN in Fiscal Periods Setup for the Finance and Sub-Ledger (as required)

The Dynamics GP system is intelligent. Under these conditions, if you create a posting to the latest historical year, the GP System will add in these postings and create another posting to correct the BBF or Retained Earning yearend adjustment.

Because of this, I highly suggest that you close the year as soon as you have most of your transactions entered from the “Final Fiscal Period” of the year. Maybe within 6 weeks of the year’s end.

What can you do if you need to add transactions to other previous years, that are prior to the most recent historical year? This can be done but gets complex. I suggest you talk to your partner for advice and help. There could be other solutions.

What if you cannot close the previous year in a timely manner? In this case, you will need to develop custom reports that take this into account.

General Ledger BBF Entry

Now that we understand these BBF transactions and how they affect reporting, let’s look at where live and what they look like.

The Balance Brought Forward Journal Entry created by the Year End Rollover process contains the following unique properties you need to take into consideration when developing custom reporting. Once you understand these, creating these reports in SSRS, Smartlist, Management Reporter, Power BI, and Excel exports becomes simpler.

These unique properties are:

1. Source Document (SOURCDOC) = “BBF” or “P/L”
2. Reference Description (REFRENCE) = “Balance Brought Forward”
3. Transaction Date (TRXDATE) = Last Day of the closed Fiscal Year (2023-12-31)
4. Year (OPENYEAR) = the current fiscal year
5. Fiscal Period (PERIODID) = 0

You can see this in the Summary and Detail Inquiry windows…

As with any reporting solutions that are not native Dynamics GP reports, these BBF general journal entries need to be considered and understood if you intend to report out of the General Journal – GL20000 – Open or GL30000 – Closed.

Most people run into reporting problems because they use the TRXDATE field. As you see from the BBF properties, this creates an issue. All ways use [OPENYEAR] for GL20000 or [HSTYEAR] for GL30000 and [PERIODID] as your filter, not the field [TRXDATE]. This will solve most of your issues.

REMEMBER:

EXCLUDE ALL VOIDED GL Transactions [VOIDED] = 1 and [Ledger_ID] if you have more than 1 ledger

GL30000 – Historical Year Reporting

If you are only reporting on a single history year, then this is simple. Just select the transactions for the one [HSTYEAR] = xxxx.

But if you want to report over several historical years, you need to take into account the BBF or PERIODID 0 transactions that occur after the oldest year you are reporting on.

Think of it this way, you want to run a report that covers historical fiscal years 2020, 2021, 2022, inside GL30000, you will have BBF entries for:

2020 – which is the BBF’s for 2019

2021 – which is the BBF’s for 2020

2022 – which is the BBF’s for 2021

If you just selected all the entries, your Balance Sheet Accounts will be doubled for each of the years, except for the last year, and your Profit & Loss Accounts will erroneously have amounts in them that are also included in the Retained Earnings Account.

So how do you fix this?

Corrections depend on what report you are trying to generate. Most fixes that I have personally developed are for Trial Balance Reports that cover multi-year periods. In this case I keep only the oldest BBF journal entry and do not include any others.

GL20000 – Open Year Reporting

Again, if you only have a single open fiscal year, then this is simple. Just select the transactions for the one [OPENYEAR] = xxxx.

But if you have two or more open fiscal years, and you want to report on one of the fiscal years, you need to deal with the Profit & Loss Accounts from the previous year and move them into the Retained Earnings Account in your reporting. This becomes more complicated but can be achieved with the use of stored procedures and temp tables.

I hope this sheds more light on the Balance Brought Forward (BBF) journal entry that is created at Year End.

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