close books

[Ken Heard]

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Derek Atkins wrote:
> Ken Heard <ken at heard.name> writes:
> 
>> David T. wrote:
>>>> But including the zeroing transaction in any report will throw your
>>>> numbers off. If you have $1200 of Electric expenses in 2009, you
>>>> will have a $1200 zeroing transaction on January 1 (or December 31,
>>>> etc.), which will throw off the figure for the month of which it is
>>>> a part. Month to month, you'll have $100--until that ZTM (zeroing
>>>> transaction month), when you'll have -$1100. Yuck.
>> How?  If for example the opening balance as of 1 January is $1200, and
>> on that day you zero the income and expense accounts, the account
>> balance at the end of that day will be zero.  Then if on 15 January you
>> pay the electric bill of $100, and if there are no other entries except
>> those made on those dates, the balance as of 31 January will be $100.
>> Consequently any report which includes this account made to show the 31
>> January position will show the balance of $100.  A report of the
>> transactions in that account for the month of January will show the
>> zeroing, but the explanation of the $1200 entry on 1 January is obvious.
> 
> The problem is that if you then run a report from Jan 1 - Jan 31, the
> report will include the $1200 offset from the previous year and throw
> off your numbers.  Sure, if you look at the individual transactions you
> will see the $1200 and then you can manually take that out of your
> numbers.  However you'll be really confused if you run this report and
> see that you spent -$1100 on electricity in January.

No.  Assume that the fiscal year is the calendar year.  Also assume that
 in 2010 your electricity account shows a balance of $1200, meaning --
if the account had zero balance as on 2010-01-01 -- that you spent $1200
on electricity in 2010.  If you run the closing on 2011-01-01-- not
2010-12-31 -- the balance in the account will still be $1200 0n
2011-01-01.  After running the closing on 2011-01-01 but before posting
any other entries on that day, the balance will be zero, because the
- -$1200 offsets the $1200 balance carried over from last year.  So, if
you pay an electricity bill of $100 on 2011-01-31, the balance will be
$100, as follows.

*Transaction details*                         *Balance*
2011-01-01 Opening balance from 2010		$1,200
2011-01-01 Close 2010: less	-1,200		    00
2010-01-31 Electricity bill: add  +100		   100

Regards, Ken Heard



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