Closing the Books

[Mike or Penny Novack]

>>>Hi All,
>>>
>>>I see an option in gnucash to "close the books" (Tools -> Close Book).
>>>I could not find any documentation on this feature.  Can anyone tell me
>>>how to determing exactly what happens when this tool is used?  
>>>      
>>>
>>It zero-izes your Income and Expense accounts into Equity. 
>>

>> Meaning all of the money you have left after all the expenses, all the 
>>assets you have, etc... will be summed and the remaining asset/money you 
>>have will be your Equity right? And this should be done when you want to 
>>start a new? like for example at the end of the year? what happens to 
>>all of the transactions for the previous year supposing.
>>    
>>
>>>Thanks!
>>>--Tony
>>>
>>>      
>>>
Not exactly like starting new. This is accounting basics. The only 
permanent accounts that should have non-zero balances at the end/start 
of an accounting cycle are of type asset, liability, and equity -- can 
of course be sub accounts of these parents. Income and expense accounts 
are temporary accounts used during the cycle to characterize activity 
that is ultimately affecting equity. At the end of the cycle these are 
closed into equity -- in the old pen and ink on paper days this would be 
via a temporary equity account called something like "profit and loss" 
but that's an unnecessary step with an automated system like GnuCash 
which can generate that report without first closing the income and 
expense accounts into a temporary "summary account".

Michael

Michael