As we roll into a new financial year, many businesses focus on setting budgets, closing off ledgers, and finalising reports. But one critical task that shouldn’t be overlooked is making your balance day adjustments (BDAs).
These adjustments are essential to ensure your financial statements reflect an accurate, fair view of your business’s performance and position as of the last day of the financial year. Done properly, BDAs provide cleaner books, clearer insights, and compliance peace of mind.
What Are Balance Day Adjustments?
Balance day adjustments are journal entries made at the end of a financial year (usually June 30 in Australia) to ensure that revenues and expenses are recognised in the correct accounting period. They follow the accrual accounting principle, which states that income and expenses must be recorded when they are earned or incurred, not necessarily when cash is received or paid.
Common Types of Balance Day Adjustments
Here are the main categories of adjustments to consider:
- Accrued Expenses
Expenses that have been incurred but not yet paid.
Example: Electricity used in June but not invoiced until July.
- Prepaid Expenses
Expenses paid in advance that apply to future periods.
Example: 12 months of insurance paid in May—only two months relate to the current year.
- Accrued Revenues
Income earned but not yet invoiced or received.
Example: Services delivered in June but not billed until July.
- Unearned Revenues
Payments received in advance for work to be done in the new year.
Example: Annual subscription fees received in June for a service starting in July.
- Depreciation
Allocation of the cost of assets over their useful life.
Example: Office equipment purchased 2 years ago needs its annual depreciation recorded.
- Inventory Adjustments
Adjustments made to reflect closing stock figures or write-downs.
Example: Stock on hand that has become obsolete or unsellable.
Why Balance Day Adjustments Matter
Balance day adjustments are more than just an accounting task—they affect:
- Your profit or loss result
Without adjustments, you might overstate or understate your true earnings. - Your tax obligations
Accurate financial records are essential for accurate tax calculations and ATO compliance. - Your reporting accuracy
Shareholders, boards, and lenders rely on your statements to make informed decisions. - Your planning and forecasting
Clean year-end numbers set the proper foundation for your new financial year strategy.
Making Balance Day Adjustments in MYOB Acumatica
If you’re using MYOB Acumatica (formerly MYOB Advanced), creating BDAs is streamlined through the General Journals module. You can:
- Post accruals or prepayments using recurring journals
- Allocate depreciation using fixed asset schedules
- Match expenses and revenue with automated allocation rules
- Attach supporting documents for audit and traceability
When Should You Enter BDAs?
- Before you close off the previous year
All adjustments must be made before locking periods or submitting tax reports. - In collaboration with your accountant or CFO
Ensure all entries are accurate, reviewed, and properly classified.
Best Practices for Balance Day Adjustments
- Reconcile accounts before adjusting
- Review prior year adjustments for consistency
- Back up your data regularly
- Keep detailed documentation for each journal entry
- Use audit trails to track who made what changes and when
Next Steps for a Strong Start to the New Financial Year
Balance day adjustments are the bridge between financial accuracy and business clarity. By handling them correctly, you’re not only meeting compliance obligations but setting the stage for confident, data-driven decision-making in the new year.
If you’re unsure about any of your adjustments, work closely with your bookkeeper or advisor, or consider seeking expert help to ensure that nothing is missed.
Need help streamlining your year-end adjustments in MYOB Acumatica?
We can help you configure automation, create templates, and review your ledger so you’re ready for FY25.
For over 35 years, Acacia has delivered business management solutions to Australian SME’s.
Our focus is on optimising and enhancing your business operations.
If you are interested in learning how Acacia can assist your business, please contact us to find out more.
