[GNC] Closing Books - Pros & Cons

[Adrien Monteleone]

The list archive is littered with such questions and answers.

I'm not sure if anyone put any definitive Pro-Con write up together.

The short answer is, you don't ever *need* to close because you don't 
*need* to reset your CoA.

GnuCash dutifully reports both 'from the beginning' and 'this 
year/period' just fine without doing so. (there are selectable columns 
on the CoA tab to do just that)

All reports default to 'this year' unless you've saved customized 
reports otherwise. (the exception being the Balance Sheet, which is 
always in any software 'since the beginning')

This saves you the need to make closing and then reversing entries each 
year. (and if you use the Business Features, you'll have to manually do 
your accrual transactions)

By not closing, you can run reports that cross annual boundaries with no 
issues should you ever find the utility in doing so.

If you do close, your P&L will be zero afterwards for that prior year. 
(because the closing entries zero out all expenses and revenue to equity 
as of the last day of the year.)

So you'd have to run that report, save a copy, then close, then ideally 
save a backup of your file, then continue on. By not closing, you just 
continue on. You can run that report at any time with the same accuracy.

If you ever need to re-run that P&L (say after making edits or 
adjustments) you'd have to do so from within that backup copy, or else 
delete/reverse the closing entries, and go from there.

In short, whatever the reason for having to 'close' in the past due to 
the limitations of number of pages in a physical book, or for 
organizational purposes relating to that, computers don't require the 
same. You can just keep going, and going, and going.

Personally, I don't close. I have no compelling reason to add work for 
myself or complicate my accounting life.

Regards,
Adrien

On 1/3/22 12:25 PM, Ryan Carver wrote:
> Hi All,
> 
> 
> 
> I am using Gnucash for my small business (a design consultancy) and I have
> no experience or knowledge of accounting.
> 
> 
> 
> Could someone please explain the PROs & CONs of using the “Close Books”
> feature in layman’s terms?
> 
> 
> 
> The online database states that using the “Close Books” tool will result in
> some report inaccuracies.  Could someone elaborate on which reports would
> result in inaccurate reports?  I ran a few test reports after using the
> “Close Book” tool and I did not notice any report inaccuracies.
> 
> 
> 
> Given my limited accounting knowledge it only seems intuitive that one
> would always want to reset their chart of accounts for each fiscal year so
> you can quickly see the correct period totals for each account.
> 
> 
> 
> What does everyone else do when starting a new fiscal year?