First of all, it won't result in "inaccuracies" as long as you
understand the effective dates of reports relative to closing..
Pro --- traditional process, as you said, makes the balances of the
temporary accounts (income , expense) related to the current period. A
closed set of books is easier to move to another machine. Can be used to
reduce the file size (bit see cons).
Cons -- May need more work/care when looking at past data,
reconstructing past reports, etc. More work with backups (if not
currently making periodic backups (should usually have a pre close and
post close backup)
Some things can make parts of this easier. For example, if you can have
a date "not a date" (a date on no other transactions are allowed except
the closing). Intelligent naming of files can make error less likely
when looking back..
Michael D Novack
PS -- I am NOT talking about this in terms of the feature/tool gnucash
has to perform the process. I am talking about the process "close the
books". Do note that in the old pen and ink on paper days the process
itself was what created the "profit and loss" report determining
"retained gain" (or loss) for the Balance Sheet. . The reason that
gnucash users do not need to "close the books" is that gnucash can
create the "P&L" and "Balance Sheet" (can determine the equity amount
"retained gains" (or losses) with the books open.
On 1/3/2022 1:25 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?
Thanks,
Ryan Carver
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