On Fri, 23 Jun 2000, Sean Millichamp wrote:
> On Fri, 23 Jun 2000, Rob Walker wrote:
> > Richard> Actually, income and expenses get "closed" at the end of the
> > Richard> accounting period by transferring their balance to the equity
> > Richard> accounts.
> For those who want to close the accounting period for personal use and who
> aren't versed in business accounting, I have these questions:
>
> 1) How should one go about "transferring" the equity? Just adjust the
> balance of every Income/Expense account to 0.00 while transferring the
> balance to a single equity account for everything?
>
> 2) If #1 is the right way of doing it then is there currently an automated
> way in Gnucash of saying "close the financial period ending on 12/31/1999"
> and have it go round up the balances and transfer them?
No, but there should be.
> I was under the impression that there was something magical in "closing
> the books" but it sounds like it's just a zeroing of the income/expense
> accounts at a given break in the accounting cycle. Is that an accurate
> way of putting it?
It's not quite that easy. In the "pen and ink" days, you made the adjusting
entries and then the P&L statement. The income (and expense) books were then
"closed" by flipping the left cover to the right and placing them on the
shelf. The next accounting period started with a fresh ledger. :-)
In computerized accounting, where you tend to store multiple accounting
periods in the same file (database, etc.), you must remember that these
closing entries are not a part of the P&L for any period but that they
get included in the balance sheet.
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