At the year-end, it's especially important to understand the relationship between Actuals and Balances. First, we should define these two terms:
Actual: An account actual expresses how much money has moved through an account within a time period. Shepherd's Staff looks at monthly and annual actuals.
Balances: The monetary value of an account at a particular point in time. The two types of balances that are most important for the year end process are beginning and ending balances for your year.
The ending balance for one year in an Asset, Liability, or Dedicated account will be the beginning balance for the same account in the next fiscal year. Through the course of the year, transactions affect the actuals of the accounts involved in those transactions. Therefore, to get to an ending balance from a beginning balance, you can add together all the monthly actuals to your beginning balance for a year, and you will end up at your ending balance for that year.
For Income and Expense accounts, actuals are what you compare to your budget to see if your church is coming in under or over budget over a time period.