Purpose of Accounting Period? Benefit to closing books?

[Mike or Penny Novack]

On 2/22/2018 4:21 PM, Dan Carpenter wrote:
> Adrien, general accounting principles close the books at the end of the fiscal year.  This process in most accounting software updates the Equity with the profit or loss balances and then zeros the income and expense accounts to begin fresh for the new year.  I am just starting with testing this software, but most software retains “last year data” in a separate file or field within the data record for comparative reporting of this month/last month ; this year/last year etc.
Gnucash (without doing  a"close the books")
a) Have last year's data in a separate file << just make a copy of the 
file at an appropriate time >>
b) Can still produce the reports for any prior time period << you can 
(if you lost them) recreate the previous period's reports from the 
CURRENT data file >>
c) And you can close the books in the old pen and ink on paper way too 
if that is what you want to do. Either using the function or totally 
manually.

This is a matter of understanding the HISTORY of bookkeeping. It was the 
PROCESS of closing the books that created the report we call "profit and 
loss" << the report WAS another temporary account used in the process of 
closing* >> And of course they needed a method of keeping the physical 
books small enough to handle << a 10,000 page book would be real awkward >>

Michael

* The individual income and expense accounts were not closed directly to 
equity. They were closed to this special "profit and loss" account and 
then THAT was closed to equity by the net profit or loss. BTW, this 
wasn't just back in the "dark ages". I am old enough to have learned 
doing it this way.