Closing the Books for the Year
A few months after the end of a fiscal year, when tax returns rest under the gimlet-eyed scrutiny of the tax authorities, most companies close their books for the previous fiscal year. The purpose of closing the books is to lock the transactions that youâve already reported on tax returns or in financial results, because the IRS and shareholders alike donât look kindly on changes to the reports theyâve received.
QuickBooks, on the other hand, doesnât care if you close the books in your company file. The closing task is mainly to protect you from the consequences of changing the numbers in previous years (like altering the company file so that it no longer matches what you reported to the IRS). Once youâve set a closing date for your company file (as described in a sec), changes to transactions on or before the closing date show up on the Closing Date Exception report (choose ReportsâAccountant & TaxesâClosing Date Exception Report). But youâre free to keep your books open if youâre not worried about editing older transactions by mistake.
If you do close your books in QuickBooks, the program still gives you a way to edit transactions prior to the closing date. Unlike other bookkeeping programs in which closed means closed, in QuickBooks, folks who know the closing-date password can still change and delete closed transactions, say to correct an egregious error before you rerun all of your end-of-year reports.
Closing the books in QuickBooks ...
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