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Dynamics 365 Community / Forums / Small and medium business | Business Central, N... / Shld we compare the nu...
Small and medium business | Business Central, N...
Suggested Answer

Shld we compare the numbers between Closed Income Statement vs Income Statement in COA?

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Posted on by joshtechsolutions 5,073
Hi Community,
 
I'm trying to teach my accounts how to use the Close Income Statement, one of my accountant compares the numbers in the Retained Earnings of Closed income Statement to the Income Statement at COA.
 
This is the report side of Income Statemenet report..
 
This is the Closed Income Statement report.
 
 
Please advise what is the difference ?
 
Thank you !
 
Categories:
Dynamics 365 Business Central
Microsoft Dynamics NAV
I have the same question (0)
  • Suggested answer
    Gavin Profile Picture
    Gavin 2,510 on at
    Hi,
     
    The close income statement routine moves the balance from every income statement code to the retained earnings account, so the balance posted to the retained earnings account should match the balance of the income statement GL codes.
     
    I’ve created this blog for business central on the different options available when closing the income statement which I hope will help.
     
    Thanks
    Gavin
     
  • joshtechsolutions Profile Picture
    joshtechsolutions 5,073 on at
    Hi Gavin ,
     
    Thank you for your reply, but I i think you might have misunderstood my question.
     
    I'm asking what is the difference between this income statement at COA report tab
     
    and this one... closing income statement. and COA Home tab.
     
  • Gavin Profile Picture
    Gavin 2,510 on at
    Hi,
     
    Apologies. I’m not able to access the system to check but I assume the one on the “home” tab under the “process” section is the close income statement routine that is ran at year end. To my recollection, and certainly in business central, this doesn’t create a report as such. It creates the journal to close the income statement accounts to retained earnings. I suspect the one on the report tab produces a report of what would happen should you run the routine. (Unfortunately I can’t check right now though) 
     
    I hope this helps
     
    Thanks
    Gavin 
     
  • Suggested answer
    Khushbu Rajvi. Profile Picture
    Khushbu Rajvi. 22,426 Super User 2026 Season 1 on at
    Yes, you can compare them, but they serve different purposes—Income Statement in COA shows live, filter-based profit/loss, while the Closed Income Statement reflects finalized year-end results posted to Retained Earnings. Differences usually come from date filters or missing closing entries.
  • joshtechsolutions Profile Picture
    joshtechsolutions 5,073 on at
     
    Thank you for your reply!
     
    Can you give me some hints where can I find the entries of whether they are closed or still open?
     
    Is it in Value entries or general ledger entries?
     
    I have a few dollars which is missing when I compares the two income statement, so wondering where do I search for this.
     
    Thank you!
  • Suggested answer
    Jainam M. Kothari Profile Picture
    Jainam M. Kothari 16,530 Super User 2026 Season 1 on at
    Hello,
     
    Income Statement Report in the Chart of Accounts: 
     
     
    This Report offers a comprehensive overview of your company's revenues and expenses for a given period. It aids in assessing your business's profitability by displaying the net income (or loss) after deducting all expenses from revenues. In summary, the Income Statement report in the Chart of Accounts is intended for evaluating financial performance.
     
    Close Income Statement:
     
    This Function is utilized at the conclusion of an accounting period (such as a month, quarter, or year) to move the net income or loss to the retained earnings account on the balance sheet. It essentially clears the income statement accounts, setting them to zero and readying them for the upcoming accounting period. In summary, the Close Income Statement function is designed to finalize and reset accounts at the end of an accounting period.
  • Vahid Ghafarpour Profile Picture
    Vahid Ghafarpour 12,262 on at
     
    If any of the responses helped resolve your issue, please take a moment to mark the best answer. This helps others in the community quickly find solutions to similar problems.

    To do this, simply click the "Does this answer your question?" button on the most helpful response and like the helpful posts. If your issue is still unresolved, feel free to provide more details so the community can assist further!

    Thanks for being an active part of the Dynamics 365 Community! 😊
     
     
  • Suggested answer
    Khushbu Rajvi. Profile Picture
    Khushbu Rajvi. 22,426 Super User 2026 Season 1 on at
  • Assisted by AI
    Saif Ali Sabri Profile Picture
    Saif Ali Sabri 2,461 Moderator on at
    In Business Central (Dynamics 365), these two are often confused because they both “look like Income Statement results,” but they are fundamentally different in purpose and timing.
    1) Income Statement (COA / Chart of Accounts report)
    This is a reporting view of your Profit & Loss accounts.
    • Pulls balances from Income Statement (P&L) G/L accounts
    • Shows performance for a selected date range (fiscal period / year-to-date)
    • Reflects current posted entries only
    • Does NOT perform any closing or posting
    • Used for analysis: “How did the business perform?”
    👉 Think of it as: “What is my profit/loss before year-end close effects?”
    2) Close Income Statement (Year-End Closing Routine)
    This is a posting process, not just a report.
    • It transfers all P&L account balances to:
      • Retained Earnings (Balance Sheet account)
    • It creates GL entries (journal postings)
    • After running it:
      • Income statement accounts are typically reset to 0 (for the new fiscal year)
      • Retained earnings is updated with the net result
    👉 Think of it as: “Move this year’s profit/loss into equity and reset P&L for the new year.”
    3) Closed Income Statement (Report)
    This is a validation / audit-style report after closing.
    • Shows the results after the close process
    • Typically reflects:
      • Income statement accounts = closed/reset
      • Retained earnings = updated
    • Used to verify that:
      • Closing entries were correctly posted
      • Total P&L was fully transferred
    👉 Think of it as: “Did the year-end close correctly reflect in the books?”
    4) Why comparing Income Statement vs Closed Income Statement is misleading
    Your accountant’s comparison is a common misunderstanding.
    You should NOT expect these reports to match, because:
    Scenario Income Statement Closed Income Statement
    Before year-end close Shows full P&L activity Not meaningful yet
    After year-end close May show zero or new-year-only activity Shows prior year moved to retained earnings
    Purpose Performance reporting Post-close verification
    Key point:
    The close process moves balances, it does not duplicate them. So you are comparing pre-close vs post-close states, not two equivalent reports.
    5) Correct way to validate Close Income Statement
    Instead of comparing reports, validate like this:
    • Total of all P&L G/L accounts before close
      = should equal
    • Amount posted to Retained Earnings after close journal
    You can verify in:
    • G/L Entries (filter by closing journal batch)
    • Retained Earnings account movements
    Final clarification for your scenario
    What you’re seeing is not an error—it's a timing and purpose mismatch:
    • Closed Income Statement report = confirmation of that process
    • Income Statement (COA) = operational reporting view
    • Close Income Statement = accounting restructuring process

    Here’s the exact way to trace Close Income Statement entries in G/L Entries (Business Central / Dynamics 365) so you can prove what was moved to Retained Earnings.

    ====================================
    🔎 Step-by-step: How to trace Year-End Closing entries in G/L Entries

    ✅ Step 1 — Open G/L Entries

    Go to:
    Search (🔍) → “G/L Entries”
    This is your main table for verification.

    ✅ Step 2 — Filter by Posting Date (Critical)

    Set filters to isolate the closing period:
    • Posting Date: last day of fiscal year (e.g., 31/12/2025)
      or
    • Range: entire closing day / period
    👉 This ensures you only see year-end movements.

    ✅ Step 3 — Filter by Document No. or Source Code (MOST IMPORTANT)

    Now identify the closing batch.

    Option A: Filter by Source Code

    Look for:
    • Source Code = “CLOSE”
    • or sometimes: “CLOSING”, “YEARCLOSE”

    Option B: Filter by Document No.

    In many companies, Business Central assigns:
    • Document No. = “CLOSE” or “YEAREND” or similar batch name

    Option C: Filter by Journal Batch Name (advanced)

    Add filter:
    • Journal Batch Name = Close Income Statement

    ✅ Step 4 — Identify the Retained Earnings entry

    Now look at the results:
    You should see entries like:
    Account Type G/L Account Description Amount
    G/L Account Revenue/Expense accounts Closed to retained earnings 0 (after close)
    G/L Account Retained Earnings “Closing Income Statement” Net Profit/Loss

    🔑 What you are looking for

    ✔ Retained Earnings account line:

    • This is the aggregation of all P&L accounts
    • It will show:
      • Debit or Credit = Net Profit/Loss

    ✔ P&L accounts:

    Depending on setup:
    • Either:
      • Reset to zero via closing entries
    • Or:
      • Remain with closing adjustment entries depending on configuration

    ✅ Step 5 — Confirm Source Document (Audit proof)

    Open a line → click “Show Related Entries” or:
    • Drill down into:
      • GLE Entry → Source Document
      • Posted Journal
    You will see:
    • “Close Income Statement” journal posting

    🧠 Step 6 — Cross-check with Retained Earnings balance

    Go to:
    Chart of Accounts → Retained Earnings → Entries
    Filter:
    • Same posting date
    • Same source code (“CLOSE”)
    You should see:
    👉 A single net movement = total P&L for the year

    ⚠️ Common mistake users make

    They try to compare:
    • Income Statement report vs Closed Income Statement report
    Instead, the correct validation is:
    ✔ G/L Entries (closing journal)
    ✔ Retained Earnings postings
    ✔ Source Code = CLOSE
    NOT report-to-report comparison.

    🎯 Quick summary

    To trace closing entries:
    1. Open G/L Entries
    2. Filter by Year-end posting date
    3. Filter by Source Code = CLOSE
    4. Find Retained Earnings account
    5. Verify net movement equals total P&L
  • Suggested answer
    Grigorios Mavrogeorgis Profile Picture
    Grigorios Mavrogeorgis 1,677 Super User 2026 Season 1 on at
    Hi,
    the two are not really meant to be compared one-to-one. The Income Statement report from the Chart of Accounts is a live report that shows the P&L for the date range you select, it just sums the income and expense accounts on the fly.

    The Close Income Statement is a different thing — it is a batch job that generates journal lines to transfer the net P&L balance into the Retained Earnings account at year-end. It does not produce a report as such, it produces a General Journal that you review and post.
    So your accountant should not really compare the two side by side. What you can compare is the net result on the Income Statement report for the fiscal year against the total amount that the Close Income Statement batch job is posting to Retained Earnings.
     
    Those two numbers should match. If they do not, usually means some entries were posted to income/expense accounts after the close was run, or the date range on the Income Statement report is wrong.
    ✅ Tick the checkbox below to mark the answer as verified, if it helped resolve your question.
     
    Regards
    Gregory Mavrogeorgis
     

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