[GNC] How to run Year End Procedures for the Tax Year (UK end 5 April 2023), and start new Data set for the New Tax Year starting 6 April 2023

[paul at kroitor.ca]

Hi,

I'm sure many here will consider the following to be a less "legit"
approach, but I just wanted to chime in to say that I use a very different
way of dealing with year-ends closings.

Firstly, you should know three things:

1. All the Close Book function really does is create two split transactions
on the specified closing date: one that zeroes out all the Income Accounts,
and another that zeroes the Cost (Expense) Accounts. This allows you to
start the next fiscal year with zero balances in income and expense
accounts. The other side of each transaction is booked to whatever Equity
account you specify when closing.

2. You can easily reverse the effect of the effect of closing by simply
deleting the two closing transactions, and you can redo the closing again at
any time too. In fact, if you must "fix" a closed prior year (see note
below), it's easier to delete the closing entries, make the fix, and rerun
the closing than it is to manually tweak the closing entries.

3. I have found some reports do allow stripping out the closing entries --
and avoiding a nonsensical report -- but others don't have this feature.
There's a post of mine here a few weeks ago about a five-year history report
that always shows zeros for the first four years, because the report
includes the closing entries for each year, which (by design) reverses the
effect of all other transactions in the year. One (messy) approach to
solving this involves making a temporary copy of the data file, deleting the
closing transactions for all prior years, running the historical reports,
and finally deleting the temporary copy (note that the approach described by
others here doesn't work when trying to get a five-year cost history).

That being said, there are comments in various Gnucash places
(Documentation, Wiki, Mailing List histories) to the effect that closing
books is considered a slightly old-fashioned way of doing things, and
although perhaps not discouraged, isn't strictly necessary. My own
preference is to do annual closings on all five sets of books I track. It
makes some reporting a little trickier to obtain, but on balance I like it
better.

The other point relates to what I said before about "fixing" a closed prior
year. When I was a systems designer for corporate accounting systems in the
80s, it was entirely anathema for anything to be modified, EVER. The only
way to fix an error, even one made seconds ago, was to add a reversing entry
and then re-add (the correct version of) the original. Later systems became
more and more liberal about this -- there are still always audit trails if
one really must dig into things in cases like fraud -- and now we have
reached a point where nothing is really locked in stone forever.

Everyone here will have their own policies / morals about what is allowed to
be modified later. In my case, I'm retired and the books I track aren't for
legal / tax reporting, so I can change prior years and rerun things when
appropriate. I'm sure many others here have much stricter requirements!

Paul

-----Original Message-----
From: gnucash-user <gnucash-user-bounces+paul=kroitor.ca at gnucash.org> On
Behalf Of CJN.... ...
Sent: Friday, April 7, 2023 7:37 PM
To: Stan Brown <the_stan_brown at fastmail.fm>; GnuCash User List
<gnucash-user at gnucash.org>
Subject: Re: [GNC] How to run Year End Procedures for the Tax Year (UK end 5
April 2023), and start new Data set for the New Tax Year starting 6 April
2023

8 April 2023

WOW - Thanks to all of you who have sent me advice of setting up GNU-Cash
for a new Financial Year.

Read all your messages - all very helpful.
Looked at the Help-Contents on Closing (after Year End 5 April) Closed
Accounts. And started new set of data.
And entered data for the Transactions of the last few days from New Year
Start 6 April.

And as far as I can see from Trial Balance, and Income/Expenses Reports, all
data is as it should be!

It's been a long Good Friday for this accounting novice. But I think I got
there.
Just hope I remember it all for the next Year End :) - Or I might be back
for more Help!

Chris
London
cjn-international at hotmail.com


-----Original Message-----
From: gnucash-user
[mailto:gnucash-user-bounces+cjn_international=hotmail.com at gnucash.org] On
Behalf Of Stan Brown
Sent: Saturday, April 8, 2023 12:09 AM
To: GnuCash User List <gnucash-user at gnucash.org>
Subject: Re: [GNC] How to run Year End Procedures for the Tax Year (UK end 5
April 2023), and start new Data set for the New Tax Year starting 6 April
2023


On 2023-04-07 14:09, Michael or Penny Novack wrote:
> 
> The point is, if you ever want to look at the books in their state 
> prior to the 2023 close you don't undo anything. Instead you retrieve 
> the back-up and open a copy of that.

That's certainly possible, and I agree it's much better than undoing things.
But there's a very large caveat:

When you open GnuCash, it opens the file you were working on most recently.
So you need to be very sure that you have opened the file you intended to,
after you have finished whatever you wanted to do with the pre-closing file.

My advice: when you're working on the pre-closing file, don't close GnuCash.
Instead, close that file, open your current file, and _then_ close GnuCash.

If you're like me (and like several people every month who run into this and
ask about it on the mailing list) you're used to having your current file
open when you open GnuCash, and you may not notice if some other file opens.

That's why I recommend closing the pre-closing file and opening your current
file before you close GC. Sure, if you have to work on your pre-closing file
again, you'll have to open it again, which is an extra step. But at least
you're never in the position of entering a bunch of transactions and _then_
discovering that you weren't in the file you meant to be in.

P.S. There's a workaround for this in Windows, and I believe in Linux as
well. Put the name of your current file on the GnuCash command line (which
is probably inside a shortcut if you're running Windows), and when GC starts
it will open that file regardless of which file you were working on last.
(In MacOS, the file on the command line is ignored.)

--
Stan Brown
Tehachapi, CA, USA
https://BrownMath.com
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