Purpose of Accounting Period? Benefit to closing books?

[Stan Brown]

2018-02-22 15:01, Adrien Monteleone wrote:
> ...
> This comes in handy when you are entering historical data and need to run several reports. By defining the period in Preferences, you get this as the default date range for reports like the Income Statement, otherwise, you’d have to set those dates manually each report run since they’ll vary from the default ‘current year'.
> 
> Since you like running reports by month routinely, you have two options other than changing the dates each time:
> 
> A) Define a saved report configuration for each report you want to run with the dates set to ‘start/end of current month’
> B) Set your Accounting Period to ‘start/end of current month’ and run reports without any additional configuration.
> 
> The only drawback to option B is that to run reports for the year, you’ll have to specify that date range. (but you still have the shortcut options of ‘start/end of current year’ available)

Thanks -- this makes sense. Seems I want to set my accounting period to
the (calendar) year, because I do want to reset income, and expenses to
zero at the end of each year. I've seen the relative-type dates in
report options, but didn't think of using them in this way.

> On Feb 22, 2018, at 1:11 PM, Stan Brown <the_stan_brown at fastmail.fm>
wrote:
>> (I'm accustomed to close the books monthly, with monthly income
>> statement and end-of-month balance sheet -- that's when I would
>> reconcile everything, though I understand GnuCash reconciliation is
>> driven in  a different way. I also want to get an annual income
>> statement. I understand that if I don't close the books monthly I can
>> still get an income state monthly by specifying dates. But in that case,
>> why would I close the books at the end of the year? or ever? Or is there
>> some benefit in GnuCash to closing the books that I'm missing?)
> 
> ... You also lose flexibility to correct prior periods since that 
> will throw off the closing entries. (you’d have to do a post-period
> correction in the new period)
That's a good point. Right now, I do have a fair number of corrections
that come up in a later month, and I do have to readjust the closing
entries manually in my dBase system. But if it's a new year I don't go
back but instead just enter a correction in January. So GnuCash would
match up with that.
 > You also wouldn’t be able to re-run any standard period reports
> after such a correction if you made one since the revenue and
> expense accounts are now zero.
I kind of figured. Argues for an annual period again.

> ‘Closing the books’ is a carry-over from the days of physical paper
volumes. Part of the organization system including starting new physical
ledger books to keep periods separate. (so you didn’t end up with
partial periods filling the end and beginning of volumes, each volume
consisted of an entire period and only that period)
> 
> Of course with computers, none of that matters any more. (there are
some documentation concerns, but that can be handled by writing the
current file and period PDF reports to a read-only medium for archival
purposes)

Thanks -- that's helpful perspective. I learned bookkeeping and
accounting back before personal computers, when COBOL was standard
accounting software, and an awful lot of books were still kept on paper.
I guess I'm still thinking in terms of those constraints.

> But you can add a column showing the present accounting period 
> totals if you like, (called "Total (Period)") so you get both
> running totals> and current totals without having to pick one or go
> through any book closing procedure. An interesting ‘feature’ of using
> this column is an at-a-glance view not only of your P&L with respect
> to current period income and expenses, but your change in position
> for each asset and liability account, essentially, how the balance
> sheet is period-to-date> affected. And all without running a report.
Thanks for that -- I did know that I ca select columns in the Accounts
tab, but I didn't know about what you're suggesting here. Thanks for the
very complete reply!

-- 
Regards,
Stan Brown
Tompkins County, New York, USA
http://BrownMath.com
http://OakRoadSystems.com