Opening and Closing necessity in any jurisdiction

[Mike or Penny Novack]

>There is a distinction between what some may consider to be best
>practice, from the days before computerised systems, and a regulatory
>need, which I thought is what we were talking about.
>
>Colin
>  
>
Would this possibly help the discussion? I think at least a little part 
of the misunderstanding is unfamiliarity with the process of what was 
entailed when doing bookkeeping the old fashioned way, pen and ink on 
ruled paper, generally paper bound into physical books. For example:

The "profit and loss" report ------ There was of course no hit the 
button and report pops out. Proper procedure meant creating (another) 
temporary account, this time under "equity" with a name like "Profit and 
Loss". Each income or expense account (also temporary accounts) would be 
closed into this account and one additional transaction for the amount 
necessary to bring THIS account into balance added on whichever side of 
the ledger required and the opposite side to equity itself.

Understand? THIS account (Profit and Loss) with the credit and debit 
amounts added up and shown to be equal (remember that one added item to 
make it so) then had the double line drawn indicating all in balance at 
this point. Of course each income or expense account was also marked in 
balance that way.

THAT is what was meant by "closed". Double lines drawn meant you didn't 
go back above that point in the books. Double lines were very important 
on those days as transcription errors were common so you really 
wanted"checkpoints indicating "books were in total balance at this point 
-- no need to go farther back looking for the error".

That account (Profit and Loss) WAS the "Profit and Loss Report". In 
other words, the report came into being as a result of the process of 
"closing the books". Just cobbling this report by writing down income 
and expense account balances without having demonstrated "books 
guaranteed in balance" would be slack practice <<note that I have 
skipped describing the "trial balance" process which would have 
proceeded doing it "for real">>

The point being made is that the computerized systems can guarantee 
"books are in balance" (Orphan and Imbalance have balances of zero) and 
never transpose digits or make other transcription errors and can 
produce the reports at any time. They don't NEED the double lines (and 
in fact, they don't show them, or at least gnucash doesn't).

Michael D Novack

PS: And of course keeping the journal pages and ledger pages in bound 
books made these finite in size. Going to have to every so often move to 
new physical volumes and immediately after having "closed the books" 
going to be the easiest time to do that as then only the standing 
accounts have balances that need to move.