[GNC] closing of accounts, and locking, "not needed in Gnucash"? Needed!

[doncram]

In the recent thread with Marilyn Graves, and also in previous threads, it
has been asserted that closing of accounts at the end of a period is not
needed.  But it is needed!

It has accurately been pointed out that Gnucash or other modern accounting
software does not need users to go through manual steps a) to close out
temporary account balances (for every revenue and expense account) to a
temporary net income account, and b) to close the temporary net income
account to a retained income account within equity.  That is so;  the
software does that automatically.

It may be true (I think it is true) that for an entity that strictly uses
cash accounting and does not recognize accruals of any kind, that no other
closing entries are needed.

But, for any entity with full accrual accounting, or with any small part of
accrual accounting, it is normally necessary to make closing entries,
typically dated December 31, to update accruals.  Often requiring use of
information not available until later:
*use of info from bills known already plus bills coming in during January,
to make an accurate statement of Accounts Payable as of December 31.
*if capital assets are being recognized, record depreciation for the year,
putting in at December 31.
*if tithing obligations are being accrued, do an update
*about taxes due, perform a good analysis of tax obligations stemming from
the year (i.e. by going through your process of filing tax forms with the
government), and then recognizing any additional tax expense if the amounts
recognized during the year were not enough (or show a negative tax expense
on December 31 if too much has been recognized), in the process making an
accurate Taxes payable balance.

And so on, for other accruals.  And when you are really satisfied, then you
should lock transactions up to December 31, so that in the future neither
you nor anyone else can accidentally enter transactions that are
miss-dated.   Except perhaps changes could be allowed by use of a
password.  Within past Gnucash development, there has been refusal to allow
such locking, but it is an essential, crucial part of accounting, IMO.  A
big credibility issue for Gnucash, relative to other accounting software
that does allow for such, because it is so basic to professional accounting
practice.   I am not sure of current state of affairs on this.  One
objection to allowing locking, which I recall, is that programmer-types
would know how to bypass the locking so it would not be a perfect control.
However it obviously would be a control that helps avoid accidental changes
or changes by uninformed data entry staff.

Don


If you do not update your accruals on December 31, then Income Statement
periods ending on that date and Balance Sheet of that date will be
misstated.  If you want quarterly reports to be accurate this way (not
generally necessary) then you need to perform similar closes on