Splitting a file into years

[Doug Laidlaw]

On Thu, 26 Jul 2007 06:57:22 am you wrote:
> In year-end closing, the income and expense accounts are all zeroed out.
> This is done (more or less) by entering a debit to offset the credit
> balance in, say, each income account. The opposing credit goes to an
> equity account like "Net Income 2006". When all of the income and
> expense accounts balance to zero, the net income account will show the
> increase (decrease) in your equity for the year based on your net
> income! This is a little simpler than the real world, but usable. In
> addition, the trial balance stills balances to zero.
>
> Asset and liability accounts are not closed. All of the transactions
> carry forward. Eventually when the asset is disposed or the liability is
> paid, the account is of historical interest and could be dropped from
> the current year because its balance has gone to zero.
>
> I don't think accountants actually split a file year by year. They use
> databases that process millions of rows. Historical data that will not
> need to be recomputed can, of course, go into a data warehouse - net
> sales by store by month in 2004 does not need to be recomputed every
> time you look for it. But it is important that the "closed" transactions
> be marked that way. You are not allowed to go back in and adjust your
> 2004 earnings if you have already told everyone how much they were. So
> there is a lock on the transactions in all of the accounts for closed
> periods.
>
> So closing is more conceptual than a weeding out of the database. It is
> a way of summarizing income and expenses for the year and getting ready
> to start counting over again. It does not require removing anything from
> the database. (Bookkeepers were taught to write everything in pen:
> nothing ever gets deleted out of paper books.)
>
> Not sure how this helps with managing a large gnucash file. I'm
> approaching 20K transactions in mine and I wish i weren't. Since I
> sometimes want to look back at expenses that are more than a year old, I
> am put off by the idea of having to open up different files to try to
> find the thing I am looking for. It would be nice to be able to keep a
> file for the current year and merge it back into an historical file at
> the end of the year.
>
> Keith
> Guelph ON
>
> Doug Laidlaw wrote:
> > On Wed, 18 Apr 2007 12:27:16 pm David T. wrote:
> >> This is something of an aside, but can anyone tell me exactly what steps
> >> an accountant would take to split a file by year? I know that one is
> >> supposed to use Equity accounts to represent the balances on January 1,
> >> but what does one do about unreconciled transactions? Do they carry
> >> over, and how do they figure into the Opening Balance transaction?
> >>
> >> With expense accounts, does one simply clear these out (thereby
> >> 'resetting' the expense balance)?
> >>
> >> What about with Stock assets? Which transactions would one retain in
> >> these accounts? I have pondered in the past about how to calculate cost
> >> basis for stocks if older transactions get removed, and it seems to me
> >> rather important from a tax-reporting perspective to retain this
> >> information. If some transactions are retained (such as those that add
> >> or remove shares), however, they must be altered in some principled
> >> manner to ensure that current account balances remain accurate. How?
> >>
> >> I have used some sort of computerized banking software for 18 years
> >> (Quicken and now GnuCash), and my account structure has evolved into a
> >> rather complex beast with transactions going back many years. With
> >> loans, mortgages, multiple investment accounts, open and closed credit
> >> accounts, tax-free spending accounts (both for myself and my spouse),
> >> and expense accounts covering every aspect of my personal life and my
> >> independent business, I would really like to be able to know how to
> >> split out older portions of the file in a principled way.
> >>
> >> If I could grok the process, perhaps I could figure out how to automate
> >> it...
> >>
> >> David
> >>
> >> --- Derek Atkins <warlord at MIT.EDU> wrote:
> >>> Quoting Carl Wagner <cwagster at gmail.com>:
> >>>> I have a file I started on 1/1/2006 to the present.  I would to split
> >>>> this file into two files one for 2006 and the other for 2007. Is this
> >>>> possible to do?  If so,  could you please send me to a How to section.
> >>>
> >>> What I do is just:
> >>>
> >>>   cp 2006 2007
> >>>
> >>> And then leave all the old data in there.   GnuCash itself does not
> >>> have a tool to do what you want.  Jonathan Kamens sent a perl script to
> >>> the list (either this of -devel, I forget) a few years ago which can be
> >>> used to strip out some transactions, but I dont know if it
> >>> will properly keep your books balanced.
> >>>
> >>> -derek
> >>> --
> >>>        Derek Atkins, SB '93 MIT EE, SM '95 MIT Media Laboratory
> >>>        Member, MIT Student Information Processing Board  (SIPB)
> >>>        URL: http://web.mit.edu/warlord/    PP-ASEL-IA     N1NWH
> >>>        warlord at MIT.EDU                        PGP key available
> >>>
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> >
> > The program gives you the option of exporting the Account Hierarchy.  I
> > simply called the export 2007-08, printed out a Balance Sheet, and
> > entered the balances in the new accounts as opening balances.  Since I am
> > not using Gnucash for business, I didn't worry about end-of-year
> > procedures, but these should be carried out first.  According to the
> > book, they will reduce all Revenue accounts to nil.
> >
> > One question:  I tried this some time ago, and the current asset and
> > liability balances were exported as well, but not recently.  Or did I
> > imagine that?
> >
> > Doug.

A fair summary of what I was saying.  I used a self-carboning system.  At the 
end of each financial year, we transferred the ledger balance of each revenue 
account to Profit and Loss.  We then wrote up a new set of ledger sheets with 
the revenue accounts at zero and the asset and liability accounts at the 
figure brought down.  This system predated computers, but my business was 
small enough that it was workable.  And being a lawyer, any accounting 
package for my Trust Account needed extra features and Law Society approval.

Splitting the years at a later date is a much more difficult exercise.

Doug.

-- 
A candle loses nothing by lighting another candle.
 - Janet Reakes.