How to close a financial year

[DaveC49]

Don,

I think most of your points have been covered by subsequent posts from other
users. I think the confusion largely arises from historical accounting
practice where each period had a physical journal and each account had  its
own physical ledger book and entries were hand made in ink (We won't go back
as far as the days of clay tablets and cuneiform marks). Changing an entry
in these circumstances generally produced an illegible/unclear mess
intoroducing the concept of reversing entries to correct mistakes rather
than applying the correction in the original entry. Similarly with closing
the books. The steps you specified were carried out in the journals and
ledgers at the end of the period  and then the closing balances transferred
to new physical books for the next period.

Accountants, being fairly anally retentive, have kept to this practice far
longer than is really required given the capacity of software systems to
maintain continuous recording and many people also tend to confuse the
"closing the books" accounting procedures with opening and closing a new
computer file. As others have pointed out Gnucash's report system can
generate reports which contain the information produced by the traditional
closing procedures without actually having to perform those procedures
explicitly.

One of the beauties of Gnucash is that generally it can support any
accounting practice you want to adopt however there are not always automated
procedures incorporated. E.g "cash" vs  "accrual" accounting. One factor in
this is that Gnucash is used in many different legal jurisdictions and an
automatic procedure which is valid in one jurisdiction may not necessarily
be valid in another. The other major factor is that the developers are all
volunteers so they have to prioritize their efforts.  The documentation is
largely in the hands of others who don't write the code. The time to
implement a quite small change in the Gnucash code extends rapidly becasue
of the complexity of code written by a number of different people over a
long period of time as I am currently finding out.

On your point #4 others have pointed out that in reality there is no such
thing as locked computer data file and that the best you can do is to write
a datetime stamped version of the datafile on a read only medium or print
out a set of reports at a given date time and store them, preferrably
multiple copies stored separately.

One feature I personally would like is the ability to restrict new data
entry to a user settable specific period, not to lock previous data from
change, but to prevent inadvertant accidental data entry in previous
periods.  I have on odd occasions entered data at the wrong date (usually by
getting the year format incorrect) accidentally in a previous period (in one
case 3-4 years before) and then because the entry hadn't appeared in my
current period compounded the error by rentering it in the correct period.
This can take some finding, particularly the first time it occurs and you
soon learn to check before hitting return fairly quickly as a consequence.




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