What's your favorite year end method?

[Mike or Penny Novack]

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>How do you separate years so the file size stays manageable and so you accounts show a year to date balance?
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John,

    I don't know for sure exactly how I will do it (this first year end 
under GnuCash) but again I would refer to "standard accounting", what 
you would do were you maintaining the books by hand with pen and ink on 
paper.

    Maybe first consider what you might mean by "your accounts show a 
year to date balance"

    You have two kinds of accounts, "standing accounts" and "temporary 
accounts". The former would be of type asset, liability, and equity. 
Accounts of these types always have a balance "at the moment" (or as of 
any particular date) but not a YTD balance. On the other hand, the 
"temporary" income and expense accounts have a balance "for this 
accounting interval" meaning since the last time that they were closed 
to equity (aka "closing the books").

    The process might be easier to understand if we pretend that GnuCash 
didn't come with the built in capability of generating an 
"Income-Expense Statement" for a specified interval. The old manual 
process? A temporary equity account tradiitonally named "Profit and 
Loss" or "Income Expense Statement" is created and all income expense 
account closed to here. Then if that was just a quarterly statement or 
whatever, returned with a transaction such as "balance as of start of 
Nth quarter" OR if at the end of the fiscal year, closed to equity (the 
gain or loss amount). That's called "closing the books" as at that point 
all the temporary ( Income and Expense) accounts all have a zero balance.

File size is another matetr. I can't see that becoming an issue for us 
(at most a few hundred transactions a year) but if it were, I would 
simply copy all the balances into a new copy of the chart of accounts. 
If you do that, MAKE PERMANENT BACKUPS (like immediately before close, 
immediately after close). In my case where I plan to leave all the past 
years' information immediately available (can thus reproduce a report 
for any date quickly) those same backups serve as verification that 
"past" data has not been altered.

Michael