Financial Accounting IFRS by Weygandt J., Kimmel P., etc:
Companies record closing entries in the general journal. A center caption,
Closing Entries, inserted in the journal between the last adjusting entry and the
first closing entry, identifi es these entries. Then the company posts the closing
entries to the ledger accounts."
The Period Closing Voucher has a Submit button which generates general ledger entries (to close the period) without creating any Journal Entry. Therefore, strictly speaking, this is not in line with Accounting Principles.
May I suggest that Period Closing Voucher have a child table Period Closing Account where closing entries are first journalized. (Like Journal Entry table and Journal Entry Account child table)
There can be a button labeled “Create” with a submenu “Closing Entries”, which when pressed will generate Closing (Journal) Entries in this Period Closing Account subtable.
When a Submit button is pressed, the Closing Entries of this Period Closing Account subtable are posted to the General Ledger.
The advantages of this approach is:
- It follows Accounting principles that Closing Entries must be Journalized.
- In many businesses cases, Closing Entries are first journalized to the temporary Income Summary Account. Then, additional entries is added to the bottom of closing entries to place Income Summary account to its final entry which in most cases is Retained Earnings. However, there are some which are required to have segmented figures, and distribute Income Summary into multiple accounts like Income from Operations, Income from Other Activities, Income from Projects, etc.
- Closing Journal Entries in Period Closing Voucher can be printed (and approved).
- Accountants will become more comfortable because they are able to see and inspect closing Journal Entries, and control when they are finally posted or submitted to the general ledger.
May I also add that Closing entries are internal business processes which do not need to be Immutable. (For example, closing entries can be cancelled and amended as long as the Final Financial Reports have not been prepared.)