Sage uses a very specific process for running the Accounts Year End and it is important that this procedure be followed. When this procedure is followed the balances on all the profit and loss nominal accounts are reset to zero for the new financial year. The sum of all the balances from these accounts represents the profit or loss for the year and this is added to the cumulative profit and loss account for the company.

See Sage Help for the details on this procedure.

In an ideal world, the figures on your trial balance at the end of your accounting year would need no adjustment and would be used in the Year End accounts. However, once the accountants get their hands on them these figures can change dramatically. Common adjustments which need to be made are depreciation, accruals, prepayments, stock, provision for bad debts, corporation tax provision etc.

These adjustments usually happen after you have run the year end procedure but it is still important to enter these adjustments so that your opening balances agree with the final version of the Year End accounts. This is simple to do and can be done by journal entry (as long as you've received the information from the accountants!)