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period closing

why period closing is required and explain the importance of period closing?

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  • author's profile photo Former Member
    Former Member
    Posted on Apr 19, 2007 at 12:33 PM

    Hi,

    At the end of every financial period the finance team have to produce reports on what has happened including the stock value etc.

    By closing the period it stops any further postings to that period (unless you allow postings to the previous period in MMRV).

    This means that they are not having to manage a moving target.

    This is an over-simplification, but basically it is to stop further postings or to ensure that current postings happen in the open period automatically.

    Steve B

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  • author's profile photo Former Member
    Former Member
    Posted on Apr 23, 2007 at 07:17 PM

    Period closing is required because results of operations need to be summarized as of a certain period of time. It aids management in determining performance/profitability. If you do not have period closing, I do not know how you can tell how well your business did for a certain period of time.

    Results of operations affects the economy, especially results of the large corporations. When you hear of a huge company with results that are less than expected (<b>especially</b> analyst expectations), the market (such as Wall Street and the London stock exchange) reacts negatively.

    Ergo, results of operations move the market either in a favorable of unfavorable direction and makes trading more exciting.

    This sounds like an answer from a business person, which is really where I came from. At the end of the day, all these ERP's are designed to aid the business users in providing financials to major stakeholders of the company. At least that is my perspective as a configurator.

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  • author's profile photo Former Member
    Former Member
    Posted on Apr 24, 2007 at 04:17 AM
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