[GNC] Gnucash Close Books option

[Derek Atkins]

Hi,

On Tue, April 20, 2021 8:51 pm, Peter S. Shenkin wrote:
> Hi,
>
> I'm using Gnucash 4.3 on MacOS. This version has a "Close Books" option.
>
> I do understand that using this option, Income and Expenses can be made to
> transfer to an equity subaccount (like Equity:Starting balance).
>
> I also understand that there are alternatives to using this option, but in
> this query I am just trying to find out in more detail what Close Books
> does.
>
> What I don't understand (based on this writeup
> <https://wiki.gnucash.org/wiki/Closing_Books>) is exactly how it works.
>
>    - Following closing the books on year X, will the Dec 31, year X
>    balances still reflect the year-X income and expenses, or will they
> have
>    been zeroed at that point?

The Income and Expense accounts get zeroed out as of the closing date.

>    - If so, it would be difficult to go back and correct something that
> was
>       done mistakenly during year X, would it not?

Sort of -- you can delete the closing transactions and re-run the Close
Books to recreate the (edited) transaction.

>    - Does the new Equity result appear on Jan 1, year X+1?

No, it appears on the closing date.

>       - If the two results appear on different days, it would appear that
>       Gnucash can't do this by means of a transaction, because a
> transaction (as
>       I understand it) takes place at a single moment in time.

Correct.

>       - I have heard that to get around this, some accounting software
>       creates a fictional date (like Dec 32 or Jan 0) on which it performs
> the
>       transferring transactions, so that Dec 31, year X reflects the
> closing
>       balances for the year and Jan 1 is initialized with the new
> balances. But I
>       think there would have been mention of this if that is the way
> Gnucash does
>       it.

That is not how GnuCash does it.  GnuCash uses a real calendar and has no
"special" dates in there.

How it *did* it, initially, was to take the "default timestamp" of Dec 31
and add one second to it.  This was because all posted times have a
default timestamp of approximately noon.  So setting the closing
transaction to one second later would assure it was the "last" transaction
of the period.  This is how it was originally implemented, but it's
probably been changed since then.

>
> Thank you,
> -P.

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-derek

-- 
       Derek Atkins                 617-623-3745
       derek at ihtfp.com             www.ihtfp.com
       Computer and Internet Security Consultant