Module 1 · Foundation · 9 min read

Opening balances and closing the year

You will be able to: Enter opening balances for accounts, customer and supplier bills and stock, and explain the Opening Balance ledger; Describe what the Year-End Close posts and why income and expenses start the next year at zero; Know when a year-end close is refused or must be reversed.

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Two events bracket a set of books: the day you start using Zeyto, when you bring in what the business already had, and the end of each financial year, when the year's profit is moved into equity. Zeyto has a screen for each.

Opening balances

Open Accounting, then Openings. Use it once, when you start, to bring in the balance of each ledger, every invoice a customer still owes you or you still owe a supplier, and your stock. Nothing reaches the books until you post. The screen has three tabs:

Accounts: pick an Account, type the amount in Debit or Credit and press Add Line. Use it for cash, bank, fixed assets, loans and capital.
Customer / Supplier bills: one row per unpaid invoice, with Invoice no, Invoice date, Due date and Amount, so receipts and payments can later be matched to each bill.
Stock: Warehouse, Item, Qty and Cost Rate. If you use this tab, do not also enter an Inventory balance on the Accounts tab, or the stock would be counted twice.

Press Post Financials for the first two tabs and Post Stock for stock. Each part posts once per fiscal year; to change it afterwards use Edit openings, and Cancel all openings undoes a year's openings.

The Opening Balance ledger

The lines you type do not have to balance. Zeyto makes each opening journal balance with one line on the ledger whose type is Opening Balance (code 3900 in the standard chart). The tile 'Difference parked on Opening Balance (3900)' shows the amount and a Balanced or Difference chip. The aim is to end with a difference of zero: find the missing entry, usually capital or a forgotten bank balance, and use Edit openings to add it.

Starting with a differenceA shop enters Cash 20,000 (Debit), Bank 80,000 (Debit) and Owner's Capital 90,000 (Credit). Entered debits are 100,000 and entered credits are 90,000. Zeyto posts a credit of AED 10,000 to the Opening Balance ledger so the journal balances. Later the owner finds an AED 10,000 supplier loan that was left out; adding it as a credit on a loan ledger brings the difference back to zero.

Year-end close

At the end of a financial year the income and expense accounts are closed: the profit or loss of the year is moved into one retained earnings account, so next year starts with income and expenses at zero while the Balance Sheet carries on. Open Accounting, then Year-End Close. The list shows every year and its status (Open, Closed, Locked or Reopened) and its Net Result.

Close the earlier years first: a year can only be closed after the year before it.
Click the year. The table shows the closing vouchers exactly as they will post, for each branch.
Check the Retained earnings account (an equity account), add a note if you wish, and press Close Year.

Zeyto posts one closing voucher per branch dated the last day of the year, then locks the year.

A year's resultFY2026 income accounts total AED 400,000 and expense accounts total AED 330,000. Net result: 400,000 - 330,000 = AED 70,000 profit. The closing voucher debits the income accounts 400,000, credits the expense accounts 330,000 and credits Retained Earnings 70,000. Debits 400,000 = credits 400,000. From 1 January 2027 Sales and expenses start at zero, and Retained Earnings is AED 70,000 higher.

Profit and loss reports leave the closing vouchers out, so a closed year still shows its income and expenses. The trial balance and balance sheet include them.
Closing a year moves no cash, and the cash flow statement ignores the closing vouchers.
To reverse a close, type a reason of at least 5 characters and press Reverse Close. It is refused while a later year is closed.

Watch outDrafts still open in a year are not part of its close. Post them first if they belong in that year.

Try it in the demo

Open https://demo.zeyto.app/demo-app/ and sign in (user admin, password demoAdmin123). This is a public demo with sample data, so nothing you do there affects a real business.
Open Accounting, then Openings. Look at the three tabs (Accounts, Customer / Supplier bills, Stock) and the Opening Header. Do not post in the demo.
Open Accounting, then Year-End Close. Read the Status and Net Result columns for each year.
If a year is open, click it to preview the closing vouchers without closing it.

Open the live demo

Public demo company, sign in as admin / demoAdmin123. Data refreshes nightly.

Key takeaways

Opening balances are entered once; any difference is parked on the Opening Balance ledger until you find the missing entry.
Year-End Close moves the year's profit into Retained Earnings so income and expenses start at zero.
A close needs the earlier year closed first and can be reversed with a written reason.

Check yourself

2 questions on this lesson. Not timed, not the exam, and you can try again. Score 60% or more, and read the lesson, to complete it.

1. Opening entries typed in total: debits AED 100,000 and credits AED 90,000. What does Zeyto do when you post?

2. FY2026 income totals AED 400,000 and expenses AED 330,000. What does the Year-End Close do to Retained Earnings?

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Practice questions for this module · Printable study sheet