Closing the books, Opening Balance & Profit & Loss

[Colin Scott]

It is safest (and easiest to see what is going on) when closing the books to :-

a)  ensure that all txns for the closing year have been posted with dates no later than the year end date - say 31st December.

b)  close the books on the following day - 1st January

c)  ensure that all txns for the new year are posted with date later than the book-closing day - so 2nd January onwards.

Working this way you can see (and go back to!) all your figures from *before* you closed the books, then see what the effect is of closing the books, then have a clean new year from the following day.  This may be slightly artificial, but it makes it very much easier to fix any errors you come across that are highlighted by your balance sheet and P&L reports, and means that you don't have to keep the books closed to the new year's txns whilst you deal with the fall-out from the previous year!

Colin