How to close a financial year

[David T.]

Don,

As I mentioned originally, there is an annual discussion about the capabilities of GnuCash in regards to closing the books—and the philosophies behind each of the options that users might choose in that regard. Reading some of those past discussions will help you understand GnuCash’s approaches regarding closing books, and also the philosophy here regarding “freezing forever” anything. You might start with the wiki, which has a summary of the GnuCash perspective on closing books (http://lists.gnucash.org/wiki/Closing_Books <http://lists.gnucash.org/wiki/Closing_Books>). As for disabling editing, try the thread at http://lists.gnucash.org/pipermail/gnucash-user/2011-January/038264.html <http://lists.gnucash.org/pipermail/gnucash-user/2011-January/038264.html> for a particularly insightful discussion.

The Close Book feature is described, albeit briefly, in section 8.9 of the Help; it may be helpful to add something to the Guide; if you think so, submit a bug through Bugzilla, and we can begin the process.

David

> On May 24, 2017, at 7:46 PM, doncram <doncram at gmail.com> wrote:
> 
> The advice to Anita to close a year's books, with warning present in the
> that doing so will destroy usability of reports henceforth, is quite
> alarming!  What is meant by "closing" in GnuCash-jargon seems different
> than what is meant more usually in accounting.
> 
> In an entirely manual accounting, closing the books at the end of year or
> other period involves several steps:
> 1. Recognize accruals (non-cash entries) such as:
> **depreciation
> **allowance for bad debt (uncollectible accounts)
> **accrue payroll liabilities (assuming payroll date was not at the end of
> year, some liability of salaries and benefits needs to be accrued
> **accrue tax liabilities
> **other adjusting entries (to adjust assets and liabilities)
> 2. Make journal entries transferring expense and revenue account balances
> to income statement summary accounts, i.e. generating an income statement
> 3. Close the income statement summary accounts to retained earnings
> 4. Freezing forever the accounts for the period (in software, this would be
> done by putting a lock on any transactions before the new period)
> 
> I am guessing that GnuCash does not support #4.
> I gather that in GnuCash, #2 and #3 don't need to be done, because the
> income statement report already exists.  And if they are done anyhow then
> usability of reports will be destroyed.  A user wants to be able to
> generate reports from prior years, e.g. for making comparisons.
> About #1, advising Anita how to proceed would require some more information
> on what the current balance sheet shows and what assets and liabilities
> need to be updated.
> 
> Anita, does this begin to help?  And could anyone else clarify?  I
> personally am willing to help update the GnuCash documentation about
> closing, as this is important!
> 
> cheers, Don
> 
> 
> On Mon, May 22, 2017 at 4:41 PM, DaveC49 <davidcousens at bigpond.com> wrote:
> 
>> Anita
>> 
>> The Wiki has a secion discussing it at
>> 
>> https://wiki.gnucash.org/wiki/Closing_Books
>> 
>> and the documentation tells you how to use the built in routine for it at
>> 
>> https://www.gnucash.org/docs/v2.6/C/gnucash-help/tool-close-book.html
>> 
>> David Cousens
>> 
>> 
>> 
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