close books

[David Jensen]

Ken,

The problem is that there is not an 'opening balance' transaction on
2011-01-01.  The account balance is a 'calculated running balance' so
the only transactions you have in January are:

                                            amt                running bal.
2011-01-01 Close 2010: less     -1,200           0.00
2010-01-31 Electricity bill: add  +100             -1,100.00

David


On Fri, Dec 3, 2010 at 11:15 AM, Ken Heard <ken at heard.name> wrote:
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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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