Hope all is well.

How it works:
If you have the option "Enable prior year posting" toggled in your Ledger's Company Profile | Options, Ledger will allow you to post transactions to accounting periods in the previous year, after the year has been closed.

You can use this function to create opening account balances in a new ledger, or to correct errors or make adjustments in the previous year's ledger. When you post to prior year, the transactions are sorted and merged with the figures already there.

Afterwards, Ledger creates the prior year posting journal, which you should be printed. This posting journal works the same way the current year's posting journal does. It is simply a record of postings that is assigned a posting sequence number. The pj lists this number along with the batch number and entry number(s) of the transactions within the batch for each batch you posted.

Does it effect the ending balances of the closed Fiscal Year?:
Yes.

Does it only effect the beginning balances of the current fiscal year?:
It does not effect the "opening" balances of the current Fiscal Year, as they stay the same as what they were when you closed the year. However, it does effect the balances of the current period in the current year. In other words, the "current balance" of the accounts will be reduced or increased by the amount of the prior year posting and the "opening balance" will reflect the balances as they were at the time you originally closed your last fiscal year using the "close year" option. This also depends on the Fiscal Period you chose to post your transactions to. Under normal circumstances (but not always) this will be last fiscal period of the previous year.

Will a FS report showing prior year balances reflect the prior year posting?:
Yes - as long as your FS has the correct period formulas to show this information.

What datasets are effected by the prior year posting (journal)?:
Actually, the posting journal itself has no significance other than what was explained above, however the prior year posting only effects the dataset you are doing the posting in. For example, if you are using Ledger on sample data in C:\Softrak\ALWIN\Samdata, with the file extension .sam - then only data in this directory with the file extension .sam will be affected by this posting. As a matter of fact, by ANY posting it works the same way. The posting of any transactions only affect the dataset you are currently working in.

I hope this has explained a few things for you - if you have any further questions, please don't hesitate to call, as you are on a current technical support plan!

Regards

A prior year posting of an "I" type account results in an additional posting to the Retained Earnings account.

Cheers