How to close a financial year

classic Classic list List threaded Threaded
23 messages Options
12
Reply | Threaded
Open this post in threaded view
|

How to close a financial year

Anita Graves-2
Dear Friends,  How does one close the file for one financial year and open a new one with the same account tree for the next financial year.

I am not sure where in the manual these things will be covered.  I managed to export my account tree but don’t know how to turn around and import it in a new file. I can’t get a blank database.

Also, when once you have closed the file for a certain financial year, can you still create/generate reports from that year’s file?

Thanks so much for the pointers and help!

Anita
_______________________________________________
gnucash-user mailing list
[hidden email]
https://lists.gnucash.org/mailman/listinfo/gnucash-user
-----
Please remember to CC this list on all your replies.
You can do this by using Reply-To-List or Reply-All.
Reply | Threaded
Open this post in threaded view
|

Re: How to close a financial year

GnuCash - User mailing list
Anita, 
This is discussed pretty much every year on the list. Try googling "close books gnucash site:lists.gnucash.org". You should find plenty of reading.
David

 
 
  On Tue, May 16, 2017 at 14:41, Anita Graves<[hidden email]> wrote:   Dear Friends,  How does one close the file for one financial year and open a new one with the same account tree for the next financial year.

I am not sure where in the manual these things will be covered.  I managed to export my account tree but don’t know how to turn around and import it in a new file. I can’t get a blank database.

Also, when once you have closed the file for a certain financial year, can you still create/generate reports from that year’s file?

Thanks so much for the pointers and help!

Anita
_______________________________________________
gnucash-user mailing list
[hidden email]
https://lists.gnucash.org/mailman/listinfo/gnucash-user
-----
Please remember to CC this list on all your replies.
You can do this by using Reply-To-List or Reply-All.  
_______________________________________________
gnucash-user mailing list
[hidden email]
https://lists.gnucash.org/mailman/listinfo/gnucash-user
-----
Please remember to CC this list on all your replies.
You can do this by using Reply-To-List or Reply-All.
Reply | Threaded
Open this post in threaded view
|

Re: How to close a financial year

Colin Law
On 16 May 2017 at 10:53, David T. via gnucash-user
<[hidden email]> wrote:
> Anita,
> This is discussed pretty much every year on the list. Try googling "close books gnucash site:lists.gnucash.org". You should find plenty of reading.

Also note that there may be no need for you to close the books at all.
The reports allow data over a selected time span to be viewed so you
can see what has happened in the year without closing them.

Colin
_______________________________________________
gnucash-user mailing list
[hidden email]
https://lists.gnucash.org/mailman/listinfo/gnucash-user
-----
Please remember to CC this list on all your replies.
You can do this by using Reply-To-List or Reply-All.
Reply | Threaded
Open this post in threaded view
|

Re: How to close a financial year

DaveC49
In reply to this post by GnuCash - User mailing list
Anita

The Wiki has a secion discussing it at

https://wiki.gnucash.org/wiki/Closing_Books

and the documentation tells you how to use the built in routine for it at

https://www.gnucash.org/docs/v2.6/C/gnucash-help/tool-close-book.html

David Cousens
David Cousens
Reply | Threaded
Open this post in threaded view
|

Re: How to close a financial year

doncram
The advice to Anita to close a year's books, with warning present in the
that doing so will destroy usability of reports henceforth, is quite
alarming!  What is meant by "closing" in GnuCash-jargon seems different
than what is meant more usually in accounting.

In an entirely manual accounting, closing the books at the end of year or
other period involves several steps:
1. Recognize accruals (non-cash entries) such as:
**depreciation
**allowance for bad debt (uncollectible accounts)
**accrue payroll liabilities (assuming payroll date was not at the end of
year, some liability of salaries and benefits needs to be accrued
**accrue tax liabilities
**other adjusting entries (to adjust assets and liabilities)
2. Make journal entries transferring expense and revenue account balances
to income statement summary accounts, i.e. generating an income statement
3. Close the income statement summary accounts to retained earnings
4. Freezing forever the accounts for the period (in software, this would be
done by putting a lock on any transactions before the new period)

I am guessing that GnuCash does not support #4.
I gather that in GnuCash, #2 and #3 don't need to be done, because the
income statement report already exists.  And if they are done anyhow then
usability of reports will be destroyed.  A user wants to be able to
generate reports from prior years, e.g. for making comparisons.
About #1, advising Anita how to proceed would require some more information
on what the current balance sheet shows and what assets and liabilities
need to be updated.

Anita, does this begin to help?  And could anyone else clarify?  I
personally am willing to help update the GnuCash documentation about
closing, as this is important!

cheers, Don


On Mon, May 22, 2017 at 4:41 PM, DaveC49 <[hidden email]> wrote:

> Anita
>
> The Wiki has a secion discussing it at
>
> https://wiki.gnucash.org/wiki/Closing_Books
>
> and the documentation tells you how to use the built in routine for it at
>
> https://www.gnucash.org/docs/v2.6/C/gnucash-help/tool-close-book.html
>
> David Cousens
>
>
>
> --
> View this message in context: http://gnucash.1415818.n4.
> nabble.com/How-to-close-a-financial-year-tp4691662p4691794.html
> Sent from the GnuCash - User mailing list archive at Nabble.com.
> _______________________________________________
> gnucash-user mailing list
> [hidden email]
> https://lists.gnucash.org/mailman/listinfo/gnucash-user
> -----
> Please remember to CC this list on all your replies.
> You can do this by using Reply-To-List or Reply-All.
>
_______________________________________________
gnucash-user mailing list
[hidden email]
https://lists.gnucash.org/mailman/listinfo/gnucash-user
-----
Please remember to CC this list on all your replies.
You can do this by using Reply-To-List or Reply-All.
Reply | Threaded
Open this post in threaded view
|

Re: How to close a financial year

GnuCash - User mailing list
Don,

As I mentioned originally, there is an annual discussion about the capabilities of GnuCash in regards to closing the books—and the philosophies behind each of the options that users might choose in that regard. Reading some of those past discussions will help you understand GnuCash’s approaches regarding closing books, and also the philosophy here regarding “freezing forever” anything. You might start with the wiki, which has a summary of the GnuCash perspective on closing books (http://lists.gnucash.org/wiki/Closing_Books <http://lists.gnucash.org/wiki/Closing_Books>). As for disabling editing, try the thread at http://lists.gnucash.org/pipermail/gnucash-user/2011-January/038264.html <http://lists.gnucash.org/pipermail/gnucash-user/2011-January/038264.html> for a particularly insightful discussion.

The Close Book feature is described, albeit briefly, in section 8.9 of the Help; it may be helpful to add something to the Guide; if you think so, submit a bug through Bugzilla, and we can begin the process.

David

> On May 24, 2017, at 7:46 PM, doncram <[hidden email]> wrote:
>
> The advice to Anita to close a year's books, with warning present in the
> that doing so will destroy usability of reports henceforth, is quite
> alarming!  What is meant by "closing" in GnuCash-jargon seems different
> than what is meant more usually in accounting.
>
> In an entirely manual accounting, closing the books at the end of year or
> other period involves several steps:
> 1. Recognize accruals (non-cash entries) such as:
> **depreciation
> **allowance for bad debt (uncollectible accounts)
> **accrue payroll liabilities (assuming payroll date was not at the end of
> year, some liability of salaries and benefits needs to be accrued
> **accrue tax liabilities
> **other adjusting entries (to adjust assets and liabilities)
> 2. Make journal entries transferring expense and revenue account balances
> to income statement summary accounts, i.e. generating an income statement
> 3. Close the income statement summary accounts to retained earnings
> 4. Freezing forever the accounts for the period (in software, this would be
> done by putting a lock on any transactions before the new period)
>
> I am guessing that GnuCash does not support #4.
> I gather that in GnuCash, #2 and #3 don't need to be done, because the
> income statement report already exists.  And if they are done anyhow then
> usability of reports will be destroyed.  A user wants to be able to
> generate reports from prior years, e.g. for making comparisons.
> About #1, advising Anita how to proceed would require some more information
> on what the current balance sheet shows and what assets and liabilities
> need to be updated.
>
> Anita, does this begin to help?  And could anyone else clarify?  I
> personally am willing to help update the GnuCash documentation about
> closing, as this is important!
>
> cheers, Don
>
>
> On Mon, May 22, 2017 at 4:41 PM, DaveC49 <[hidden email]> wrote:
>
>> Anita
>>
>> The Wiki has a secion discussing it at
>>
>> https://wiki.gnucash.org/wiki/Closing_Books
>>
>> and the documentation tells you how to use the built in routine for it at
>>
>> https://www.gnucash.org/docs/v2.6/C/gnucash-help/tool-close-book.html
>>
>> David Cousens
>>
>>
>>
>> --
>> View this message in context: http://gnucash.1415818.n4.
>> nabble.com/How-to-close-a-financial-year-tp4691662p4691794.html
>> Sent from the GnuCash - User mailing list archive at Nabble.com.
>> _______________________________________________
>> gnucash-user mailing list
>> [hidden email]
>> https://lists.gnucash.org/mailman/listinfo/gnucash-user
>> -----
>> Please remember to CC this list on all your replies.
>> You can do this by using Reply-To-List or Reply-All.
>>
> _______________________________________________
> gnucash-user mailing list
> [hidden email]
> https://lists.gnucash.org/mailman/listinfo/gnucash-user
> -----
> Please remember to CC this list on all your replies.
> You can do this by using Reply-To-List or Reply-All.

_______________________________________________
gnucash-user mailing list
[hidden email]
https://lists.gnucash.org/mailman/listinfo/gnucash-user
-----
Please remember to CC this list on all your replies.
You can do this by using Reply-To-List or Reply-All.
Reply | Threaded
Open this post in threaded view
|

Re: How to close a financial year

Mike or Penny Novack-3
In reply to this post by doncram
On 5/24/2017 10:46 AM, doncram wrote:
>   .......  What is meant by "closing" in GnuCash-jargon seems different
> than what is meant more usually in accounting.
> I............
> 4. Freezing forever the accounts for the period (in software, this would be
> done by putting a lock on any transactions before the new period)
>
> I am guessing that GnuCash does not support #4.
> I gather that in GnuCash, #2 and #3 don't need to be done, because the
> income statement report already exists.
a) The intermediate steps once used in pen and ink on paper accounting
are indeed redundant and can be skipped

b) No, #4 is EASY. Your confusion is in forgetting that in old fashioned
pen and ink on paper accounting this was done by putting the old journal
and ledger volumes away when the volumes for the new period began. You
do the SAME THING with gnucash if you wish. I suspect that the reason
you didn't "see it" is you were expecting a "button to push"? (within
gnucash)
    1) To make a file unalterable, you make a copy of that file onto
read only medium.
    2) Making copies of files is something you ordinarily do outside of
applications. How are you now making backups? This is just a special
sort of backup (one on medium that makes it read only).

When I am doing this for one of the organizations for which I keep
books, I do a pre-close backup (after adjusting entries like
depreciation but before closing income and expense accounts to equity)
and a post close backup, burn copies to CDROM (or DVDROM) and among
other things, make sure some other officer of the organization gets
copies. You do the "Income Statement" (well "Statement of Revenues and
Expenses" as my organizations are non-profits) in the pre-close and the
"Balance Sheet" either.



Michael D Novack
_______________________________________________
gnucash-user mailing list
[hidden email]
https://lists.gnucash.org/mailman/listinfo/gnucash-user
-----
Please remember to CC this list on all your replies.
You can do this by using Reply-To-List or Reply-All.
Reply | Threaded
Open this post in threaded view
|

Re: How to close a financial year

doncram
Thank you to David T. and to Michael D Novack and others for observations
on closing.  Ideas from these and other comments that I can look for in
past ("annual") discussions oughta be incorporated into documentation.
Some notes while this is fresh:

*Annual discussions, true "frequently asked questions" --> opportunity to
improve documentation

*The Tutorial and Concept Guide does not address closing at all, if I am
not mistaken...it should be covered in Chapter 13 about businesses and it
also should be covered in closing for personal finances

*The Wiki coverage (http://lists.gnucash.org/wiki/Closing_Books) is
alarming to me in the difference of its terminology from that of
introductory accounting textbook treatment of the topic...it suggests the
purpose of closing is to zero out account balances or to "zero
transactions". I need to review textbook treatment myself, but what's
needed in explanation to regular users is a discussion of all the usual
aspects, starting with making adjusting entries -- a huge theme in chapter
after chapter of textbooks (e.g. recognize accrued interest in mortgages,
loan & bond liabilities and assets, for one i didn't mention yet).  Provide
example journal entries of each type.

*Then go through discussion of all the logical steps of closing in a manual
system or in big commercial accounting software, and how you can
approximate that in GnuCash (e.g., as suggested, make a point of backing up
the data and securely storing/distributing it).

*Note freezing is not the same...the prior years data stays in your system,
and if it is not frozen then errors can be introduced, you might
accidentally add or change a prior year transaction.  In commercial
standard accounting, the past data is locked by password at least, and
prior year info is only changed in exceptional circumstances (explain
those...and how even for public restatements of financials, the past info
is likely not changed).

*I still am gathering that password-locking the past period data is not
possible.

*Both the Wiki and the Help coverage use incorrect-to-my-ears language
about the Chart of Accounts, both saying that the Chart of Accounts will
show amounts of some kind.  GnuCash usage should be brought into conformity
with accounting usage where the Chart of Accounts is a list of the account
names and account numbers and account types only;  it does not have any
dollar amounts.  The GnuCash usage is referring to what I would call Trial
Balances i think.

*What is the goal in closing?  I think it is about bringing the state of
financial reporting into a "good state", e.g. where the Balance Sheet and
the Income Statement/Statement of Revenues and Expenses are accurate in
accordance with your organization's or your personal accounting standards,
perhaps U.S. Generally Accepted Accounting Principles perhaps with
modifications, or perhaps compliance with Tax filing (or both).  Perhaps it
is cash basis.  What your nonprofit's board or independent accountant will
likely accept.  An individual may want their accounting to match tax filing
(close but not same as cash basis), e.g. use depreciation per tax standards
rather than GAAP, which is a choice.   The goal could be to accurately
state your income as will match on tax forms.  A number of adjusting
entries are needed, and once a year perhaps is good for considering
revaluations of property, etc.  Side note: for U.S. personal taxes if you
deduct car usage for personal business usage according to mileage at
allowable rate, that means that you need to make an accrual, an adjustment,
relating to difference between that vs. your "actual" car expenses.  The
Tutorial and Concept Guide treatment should start with the goal(s) you can
have.

I gather I should submit a bug through Bugzilla to address changes for the
Manual and changes for the Tutorial and Concept Guide. Presumably I could
just edit the Wiki section directly.  I don't yet understand how the Wiki
is supposed to relate to the other documentation. Maybe the Wiki is to
cover stuff not yet in the "formal" documentation (the Manual and the
Guide, which are harder to change)?  --cheers, Don



On Wed, May 24, 2017 at 3:01 PM, Mike or Penny Novack <
[hidden email]> wrote:

> On 5/24/2017 10:46 AM, doncram wrote:
>
>>   .......  What is meant by "closing" in GnuCash-jargon seems different
>> than what is meant more usually in accounting.
>> I............
>> 4. Freezing forever the accounts for the period (in software, this would
>> be
>> done by putting a lock on any transactions before the new period)
>>
>> I am guessing that GnuCash does not support #4.
>> I gather that in GnuCash, #2 and #3 don't need to be done, because the
>> income statement report already exists.
>>
> a) The intermediate steps once used in pen and ink on paper accounting are
> indeed redundant and can be skipped
>
> b) No, #4 is EASY. Your confusion is in forgetting that in old fashioned
> pen and ink on paper accounting this was done by putting the old journal
> and ledger volumes away when the volumes for the new period began. You do
> the SAME THING with gnucash if you wish. I suspect that the reason you
> didn't "see it" is you were expecting a "button to push"? (within gnucash)
>    1) To make a file unalterable, you make a copy of that file onto read
> only medium.
>    2) Making copies of files is something you ordinarily do outside of
> applications. How are you now making backups? This is just a special sort
> of backup (one on medium that makes it read only).
>
> When I am doing this for one of the organizations for which I keep books,
> I do a pre-close backup (after adjusting entries like depreciation but
> before closing income and expense accounts to equity) and a post close
> backup, burn copies to CDROM (or DVDROM) and among other things, make sure
> some other officer of the organization gets copies. You do the "Income
> Statement" (well "Statement of Revenues and Expenses" as my organizations
> are non-profits) in the pre-close and the "Balance Sheet" either.
>
>
>
> Michael D Novack
>
> _______________________________________________
> gnucash-user mailing list
> [hidden email]
> https://lists.gnucash.org/mailman/listinfo/gnucash-user
> -----
> Please remember to CC this list on all your replies.
> You can do this by using Reply-To-List or Reply-All.
>
_______________________________________________
gnucash-user mailing list
[hidden email]
https://lists.gnucash.org/mailman/listinfo/gnucash-user
-----
Please remember to CC this list on all your replies.
You can do this by using Reply-To-List or Reply-All.
Reply | Threaded
Open this post in threaded view
|

Re: How to close a financial year

Adrien Monteleone

> On May 24, 2017, at 9:56 PM, doncram <[hidden email]> wrote:
>
> Thank you to David T. and to Michael D Novack and others for observations
> on closing.  Ideas from these and other comments that I can look for in
> past ("annual") discussions oughta be incorporated into documentation.
> Some notes while this is fresh:
>
> *Annual discussions, true "frequently asked questions" --> opportunity to
> improve documentation
>
> *The Tutorial and Concept Guide does not address closing at all, if I am
> not mistaken...it should be covered in Chapter 13 about businesses and it
> also should be covered in closing for personal finances
>
> *The Wiki coverage (http://lists.gnucash.org/wiki/Closing_Books) is
> alarming to me in the difference of its terminology from that of
> introductory accounting textbook treatment of the topic...it suggests the
> purpose of closing is to zero out account balances or to "zero
> transactions". I need to review textbook treatment myself, but what's
> needed in explanation to regular users is a discussion of all the usual
> aspects, starting with making adjusting entries -- a huge theme in chapter
> after chapter of textbooks (e.g. recognize accrued interest in mortgages,
> loan & bond liabilities and assets, for one i didn't mention yet).  Provide
> example journal entries of each type.
>
> *Then go through discussion of all the logical steps of closing in a manual
> system or in big commercial accounting software, and how you can
> approximate that in GnuCash (e.g., as suggested, make a point of backing up
> the data and securely storing/distributing it).
>
> *Note freezing is not the same...the prior years data stays in your system,
> and if it is not frozen then errors can be introduced, you might
> accidentally add or change a prior year transaction.  In commercial
> standard accounting, the past data is locked by password at least, and
> prior year info is only changed in exceptional circumstances (explain
> those...and how even for public restatements of financials, the past info
> is likely not changed).
>
> *I still am gathering that password-locking the past period data is not
> possible.
>
> *Both the Wiki and the Help coverage use incorrect-to-my-ears language
> about the Chart of Accounts, both saying that the Chart of Accounts will
> show amounts of some kind.  GnuCash usage should be brought into conformity
> with accounting usage where the Chart of Accounts is a list of the account
> names and account numbers and account types only;  it does not have any
> dollar amounts.  The GnuCash usage is referring to what I would call Trial
> Balances i think.

I think the way the Chart of Accounts is currently presented could be very useful. It is helpful to see at a glance what the current balance of any particular account is without opening its register. This has no direct paper analogy, nor does it need to. If the idea is to live within the limitations of paper books, then just use paper books.

The CoA could be MORE useful if the expense and income accounts had the option to be set as ‘current accounting period’ or something similar. Having them set to whatever arbitrary (or not) opening date in history is certainly less meaningful, at least for me. Now for assets and liabilities, a current balance from the beginning of the book IS useful as a trial balance sheet would be.

I use another application for a business that takes the approach you described for its chart of accounts. Pretty pointless and much less functional in my opinion. It was a set once and forget it sort of thing. The GnuCash approach has much more utility.

The way I think of it, the Accounts tab serves the function of a Chart of Accounts, but it was intended and is so much more. Is there really a need to have a separate, otherwise information only, non-functioning list of accounts? How is that an improvement or a benefit?

Just my 2¢,

Adrien

>
> *What is the goal in closing?  I think it is about bringing the state of
> financial reporting into a "good state", e.g. where the Balance Sheet and
> the Income Statement/Statement of Revenues and Expenses are accurate in
> accordance with your organization's or your personal accounting standards,
> perhaps U.S. Generally Accepted Accounting Principles perhaps with
> modifications, or perhaps compliance with Tax filing (or both).  Perhaps it
> is cash basis.  What your nonprofit's board or independent accountant will
> likely accept.  An individual may want their accounting to match tax filing
> (close but not same as cash basis), e.g. use depreciation per tax standards
> rather than GAAP, which is a choice.   The goal could be to accurately
> state your income as will match on tax forms.  A number of adjusting
> entries are needed, and once a year perhaps is good for considering
> revaluations of property, etc.  Side note: for U.S. personal taxes if you
> deduct car usage for personal business usage according to mileage at
> allowable rate, that means that you need to make an accrual, an adjustment,
> relating to difference between that vs. your "actual" car expenses.  The
> Tutorial and Concept Guide treatment should start with the goal(s) you can
> have.
>
> I gather I should submit a bug through Bugzilla to address changes for the
> Manual and changes for the Tutorial and Concept Guide. Presumably I could
> just edit the Wiki section directly.  I don't yet understand how the Wiki
> is supposed to relate to the other documentation. Maybe the Wiki is to
> cover stuff not yet in the "formal" documentation (the Manual and the
> Guide, which are harder to change)?  --cheers, Don
>
>
>
> On Wed, May 24, 2017 at 3:01 PM, Mike or Penny Novack <
> [hidden email]> wrote:
>
>> On 5/24/2017 10:46 AM, doncram wrote:
>>
>>>  .......  What is meant by "closing" in GnuCash-jargon seems different
>>> than what is meant more usually in accounting.
>>> I............
>>> 4. Freezing forever the accounts for the period (in software, this would
>>> be
>>> done by putting a lock on any transactions before the new period)
>>>
>>> I am guessing that GnuCash does not support #4.
>>> I gather that in GnuCash, #2 and #3 don't need to be done, because the
>>> income statement report already exists.
>>>
>> a) The intermediate steps once used in pen and ink on paper accounting are
>> indeed redundant and can be skipped
>>
>> b) No, #4 is EASY. Your confusion is in forgetting that in old fashioned
>> pen and ink on paper accounting this was done by putting the old journal
>> and ledger volumes away when the volumes for the new period began. You do
>> the SAME THING with gnucash if you wish. I suspect that the reason you
>> didn't "see it" is you were expecting a "button to push"? (within gnucash)
>>   1) To make a file unalterable, you make a copy of that file onto read
>> only medium.
>>   2) Making copies of files is something you ordinarily do outside of
>> applications. How are you now making backups? This is just a special sort
>> of backup (one on medium that makes it read only).
>>
>> When I am doing this for one of the organizations for which I keep books,
>> I do a pre-close backup (after adjusting entries like depreciation but
>> before closing income and expense accounts to equity) and a post close
>> backup, burn copies to CDROM (or DVDROM) and among other things, make sure
>> some other officer of the organization gets copies. You do the "Income
>> Statement" (well "Statement of Revenues and Expenses" as my organizations
>> are non-profits) in the pre-close and the "Balance Sheet" either.
>>
>>
>>
>> Michael D Novack
>>
>> _______________________________________________
>> gnucash-user mailing list
>> [hidden email]
>> https://lists.gnucash.org/mailman/listinfo/gnucash-user
>> -----
>> Please remember to CC this list on all your replies.
>> You can do this by using Reply-To-List or Reply-All.
>>
> _______________________________________________
> gnucash-user mailing list
> [hidden email]
> https://lists.gnucash.org/mailman/listinfo/gnucash-user
> -----
> Please remember to CC this list on all your replies.
> You can do this by using Reply-To-List or Reply-All.

_______________________________________________
gnucash-user mailing list
[hidden email]
https://lists.gnucash.org/mailman/listinfo/gnucash-user
-----
Please remember to CC this list on all your replies.
You can do this by using Reply-To-List or Reply-All.
Reply | Threaded
Open this post in threaded view
|

Re: How to close a financial year

GnuCash - User mailing list
In reply to this post by doncram
Don, 
Your contributions will be welcome. As I do not close my books, and also do not use the business features, I can only offer you editorial guidance and general help in the process. 
As for the term "Chart of Accounts", Gnucash uses this term for the page that displays all accounts in a hierarchical tree, i.e., the first summary page when you open a file. This page in Gnucash includes balances, although it is configurable. This is noted in the glossary, although the definition might be improved to explain Gnucash's spin on the term. 

As stated elsewhere, the wiki is not the same as the documentation, and this is intentional. The docs are more formal, whereas the wiki is more immediate. In the past, information has tended to gravitate in one place or the other, and once there, stays there. If your goal is to improve the docs (which I endorse), I think you should file a bug and work through that mechanism, rather than put stuff into the wiki that you intend to place in the docs. 
David
 
 
  On Thu, May 25, 2017 at 7:57, doncram<[hidden email]> wrote:   Thank you to David T. and to Michael D Novack and others for observations
on closing.  Ideas from these and other comments that I can look for in
past ("annual") discussions oughta be incorporated into documentation.
Some notes while this is fresh:

*Annual discussions, true "frequently asked questions" --> opportunity to
improve documentation

*The Tutorial and Concept Guide does not address closing at all, if I am
not mistaken...it should be covered in Chapter 13 about businesses and it
also should be covered in closing for personal finances

*The Wiki coverage (http://lists.gnucash.org/wiki/Closing_Books) is
alarming to me in the difference of its terminology from that of
introductory accounting textbook treatment of the topic...it suggests the
purpose of closing is to zero out account balances or to "zero
transactions". I need to review textbook treatment myself, but what's
needed in explanation to regular users is a discussion of all the usual
aspects, starting with making adjusting entries -- a huge theme in chapter
after chapter of textbooks (e.g. recognize accrued interest in mortgages,
loan & bond liabilities and assets, for one i didn't mention yet).  Provide
example journal entries of each type.

*Then go through discussion of all the logical steps of closing in a manual
system or in big commercial accounting software, and how you can
approximate that in GnuCash (e.g., as suggested, make a point of backing up
the data and securely storing/distributing it).

*Note freezing is not the same...the prior years data stays in your system,
and if it is not frozen then errors can be introduced, you might
accidentally add or change a prior year transaction.  In commercial
standard accounting, the past data is locked by password at least, and
prior year info is only changed in exceptional circumstances (explain
those...and how even for public restatements of financials, the past info
is likely not changed).

*I still am gathering that password-locking the past period data is not
possible.

*Both the Wiki and the Help coverage use incorrect-to-my-ears language
about the Chart of Accounts, both saying that the Chart of Accounts will
show amounts of some kind.  GnuCash usage should be brought into conformity
with accounting usage where the Chart of Accounts is a list of the account
names and account numbers and account types only;  it does not have any
dollar amounts.  The GnuCash usage is referring to what I would call Trial
Balances i think.

*What is the goal in closing?  I think it is about bringing the state of
financial reporting into a "good state", e.g. where the Balance Sheet and
the Income Statement/Statement of Revenues and Expenses are accurate in
accordance with your organization's or your personal accounting standards,
perhaps U.S. Generally Accepted Accounting Principles perhaps with
modifications, or perhaps compliance with Tax filing (or both).  Perhaps it
is cash basis.  What your nonprofit's board or independent accountant will
likely accept.  An individual may want their accounting to match tax filing
(close but not same as cash basis), e.g. use depreciation per tax standards
rather than GAAP, which is a choice.  The goal could be to accurately
state your income as will match on tax forms.  A number of adjusting
entries are needed, and once a year perhaps is good for considering
revaluations of property, etc.  Side note: for U.S. personal taxes if you
deduct car usage for personal business usage according to mileage at
allowable rate, that means that you need to make an accrual, an adjustment,
relating to difference between that vs. your "actual" car expenses.  The
Tutorial and Concept Guide treatment should start with the goal(s) you can
have.

I gather I should submit a bug through Bugzilla to address changes for the
Manual and changes for the Tutorial and Concept Guide. Presumably I could
just edit the Wiki section directly.  I don't yet understand how the Wiki
is supposed to relate to the other documentation. Maybe the Wiki is to
cover stuff not yet in the "formal" documentation (the Manual and the
Guide, which are harder to change)?  --cheers, Don



On Wed, May 24, 2017 at 3:01 PM, Mike or Penny Novack <
[hidden email]> wrote:

> On 5/24/2017 10:46 AM, doncram wrote:
>
>>  .......  What is meant by "closing" in GnuCash-jargon seems different
>> than what is meant more usually in accounting.
>> I............
>> 4. Freezing forever the accounts for the period (in software, this would
>> be
>> done by putting a lock on any transactions before the new period)
>>
>> I am guessing that GnuCash does not support #4.
>> I gather that in GnuCash, #2 and #3 don't need to be done, because the
>> income statement report already exists.
>>
> a) The intermediate steps once used in pen and ink on paper accounting are
> indeed redundant and can be skipped
>
> b) No, #4 is EASY. Your confusion is in forgetting that in old fashioned
> pen and ink on paper accounting this was done by putting the old journal
> and ledger volumes away when the volumes for the new period began. You do
> the SAME THING with gnucash if you wish. I suspect that the reason you
> didn't "see it" is you were expecting a "button to push"? (within gnucash)
>    1) To make a file unalterable, you make a copy of that file onto read
> only medium.
>    2) Making copies of files is something you ordinarily do outside of
> applications. How are you now making backups? This is just a special sort
> of backup (one on medium that makes it read only).
>
> When I am doing this for one of the organizations for which I keep books,
> I do a pre-close backup (after adjusting entries like depreciation but
> before closing income and expense accounts to equity) and a post close
> backup, burn copies to CDROM (or DVDROM) and among other things, make sure
> some other officer of the organization gets copies. You do the "Income
> Statement" (well "Statement of Revenues and Expenses" as my organizations
> are non-profits) in the pre-close and the "Balance Sheet" either.
>
>
>
> Michael D Novack
>
> _______________________________________________
> gnucash-user mailing list
> [hidden email]
> https://lists.gnucash.org/mailman/listinfo/gnucash-user
> -----
> Please remember to CC this list on all your replies.
> You can do this by using Reply-To-List or Reply-All.
>
_______________________________________________
gnucash-user mailing list
[hidden email]
https://lists.gnucash.org/mailman/listinfo/gnucash-user
-----
Please remember to CC this list on all your replies.
You can do this by using Reply-To-List or Reply-All.
 
_______________________________________________
gnucash-user mailing list
[hidden email]
https://lists.gnucash.org/mailman/listinfo/gnucash-user
-----
Please remember to CC this list on all your replies.
You can do this by using Reply-To-List or Reply-All.
Liz
Reply | Threaded
Open this post in threaded view
|

Re: How to close a financial year

Liz
In reply to this post by doncram
On Wed, 24 May 2017 22:56:25 -0400
doncram <[hidden email]> wrote:

> *I still am gathering that password-locking the past period data is
> not possible.

It is 'possible', but its a naive sort of lock. It looks good, but the
problem is that it is open to hacking. Mike Novack has made annual
posts on that topic too.

I do my write protected backup each year. I burn to CD-ROM and hand it
to the accountant.

Liz
_______________________________________________
gnucash-user mailing list
[hidden email]
https://lists.gnucash.org/mailman/listinfo/gnucash-user
-----
Please remember to CC this list on all your replies.
You can do this by using Reply-To-List or Reply-All.
Reply | Threaded
Open this post in threaded view
|

Re: How to close a financial year

Derek Atkins
In reply to this post by doncram
doncram <[hidden email]> writes:

> The advice to Anita to close a year's books, with warning present in the
> that doing so will destroy usability of reports henceforth, is quite
> alarming!  What is meant by "closing" in GnuCash-jargon seems different
> than what is meant more usually in accounting.

AFAIK all the reports properly handle the Close Books tool.

> In an entirely manual accounting, closing the books at the end of year or
> other period involves several steps:
> 1. Recognize accruals (non-cash entries) such as:
> **depreciation
> **allowance for bad debt (uncollectible accounts)
> **accrue payroll liabilities (assuming payroll date was not at the end of
> year, some liability of salaries and benefits needs to be accrued
> **accrue tax liabilities
> **other adjusting entries (to adjust assets and liabilities)
> 2. Make journal entries transferring expense and revenue account balances
> to income statement summary accounts, i.e. generating an income statement
> 3. Close the income statement summary accounts to retained earnings
> 4. Freezing forever the accounts for the period (in software, this would be
> done by putting a lock on any transactions before the new period)
>
> I am guessing that GnuCash does not support #4.
> I gather that in GnuCash, #2 and #3 don't need to be done, because the
> income statement report already exists.  And if they are done anyhow then
> usability of reports will be destroyed.  A user wants to be able to
> generate reports from prior years, e.g. for making comparisons.
> About #1, advising Anita how to proceed would require some more information
> on what the current balance sheet shows and what assets and liabilities
> need to be updated.

The current tool just rolls up all the Income and Expense accounts into
Equity, basically zero-izing the Income and Expense accounts in the CoA
for the new period.  That's all it does.  It's useful if you want your
Income/Expense CoA balances to show the "current period" balance instead
of "since inception" balances.  And no, it's not required because all
the reports will properly deal with the behavior with or without closing
the books.

You're correct that GnuCash does not support #4, and indeed no piece of
software with a writeable database can.  Those that claim to do so are
lying; what they mean is that you cannot do it through the UI, but that
doesn't mean you cannot do it.

> Anita, does this begin to help?  And could anyone else clarify?  I
> personally am willing to help update the GnuCash documentation about
> closing, as this is important!
>
> cheers, Don

> Please remember to CC this list on all your replies.
> You can do this by using Reply-To-List or Reply-All.

-derek

--
       Derek Atkins, SB '93 MIT EE, SM '95 MIT Media Laboratory
       Member, MIT Student Information Processing Board  (SIPB)
       URL: http://web.mit.edu/warlord/    PP-ASEL-IA     N1NWH
       [hidden email]                        PGP key available
_______________________________________________
gnucash-user mailing list
[hidden email]
https://lists.gnucash.org/mailman/listinfo/gnucash-user
-----
Please remember to CC this list on all your replies.
You can do this by using Reply-To-List or Reply-All.
Reply | Threaded
Open this post in threaded view
|

Re: How to close a financial year & how to keep 'earmarked' funds

Anita Graves-2
I am astounded at the amount of help you dear people offer!  Thank you very much.

After glancing at all the replies, I have decided to back away from any idea of ‘closing the file’ for the previous year.  I say this because a) I am a novice at GnuCash and b) I have an accountant who will take a look at this later on and hopefully help out.  My only reason for wanting to ‘close’ the books was in order to properly carry forward any account balances.  In my case, I had some advanced fund balances in the expenses as subaccounts and was hoping there would be a ‘magical’ way to carry these balances forward, along with the balances forward in the asset, and equity accounts, but don’t think I know how to do that.  In the end, I just opened the same account tree in a new file and manually put in these balances.  I need help to know how to account for funds that are ‘earmarked’ (i.e., donated and contributed for specific purposes and which are not necessarily spent in one year, but carried forward, showing the expenses to draw them down as they occur, and other transactions affecting each of these ‘earmarked’ funds, accordingly.

We are a religious organization, and an international one, so funds could be contributed ‘earmarked’ for a) the national fund; b) the international fund; c) repairs and maintenance of the meeting place; e) construction of a house of worship, etc.

I would very much like to know how these funds should be entered in the accounts.  You take money from the asset accounts (checking or cash) and put it in special ‘earmarked’ expense subaccounts, then draw the funds toward zero as they are spent, and the balances go forward from year to year, if that is the case.

Can anyone tell me how to do this?  I am in Cyprus, and we are a corporate entity, a limited company, not non-profit, not charitable.  We have no experience with taxes because our contributions are so small and no one has ever expressed a need to have their contributions exempted from taxation.

Thanks to anyone who can help me on this

> On 25 May 2017, at 5:50 PM, Derek Atkins <[hidden email]> wrote:
>
> doncram <[hidden email]> writes:
>
>> The advice to Anita to close a year's books, with warning present in the
>> that doing so will destroy usability of reports henceforth, is quite
>> alarming!  What is meant by "closing" in GnuCash-jargon seems different
>> than what is meant more usually in accounting.
>
> AFAIK all the reports properly handle the Close Books tool.
>
>> In an entirely manual accounting, closing the books at the end of year or
>> other period involves several steps:
>> 1. Recognize accruals (non-cash entries) such as:
>> **depreciation
>> **allowance for bad debt (uncollectible accounts)
>> **accrue payroll liabilities (assuming payroll date was not at the end of
>> year, some liability of salaries and benefits needs to be accrued
>> **accrue tax liabilities
>> **other adjusting entries (to adjust assets and liabilities)
>> 2. Make journal entries transferring expense and revenue account balances
>> to income statement summary accounts, i.e. generating an income statement
>> 3. Close the income statement summary accounts to retained earnings
>> 4. Freezing forever the accounts for the period (in software, this would be
>> done by putting a lock on any transactions before the new period)
>>
>> I am guessing that GnuCash does not support #4.
>> I gather that in GnuCash, #2 and #3 don't need to be done, because the
>> income statement report already exists.  And if they are done anyhow then
>> usability of reports will be destroyed.  A user wants to be able to
>> generate reports from prior years, e.g. for making comparisons.
>> About #1, advising Anita how to proceed would require some more information
>> on what the current balance sheet shows and what assets and liabilities
>> need to be updated.
>
> The current tool just rolls up all the Income and Expense accounts into
> Equity, basically zero-izing the Income and Expense accounts in the CoA
> for the new period.  That's all it does.  It's useful if you want your
> Income/Expense CoA balances to show the "current period" balance instead
> of "since inception" balances.  And no, it's not required because all
> the reports will properly deal with the behavior with or without closing
> the books.
>
> You're correct that GnuCash does not support #4, and indeed no piece of
> software with a writeable database can.  Those that claim to do so are
> lying; what they mean is that you cannot do it through the UI, but that
> doesn't mean you cannot do it.
>
>> Anita, does this begin to help?  And could anyone else clarify?  I
>> personally am willing to help update the GnuCash documentation about
>> closing, as this is important!
>>
>> cheers, Don
>
>> Please remember to CC this list on all your replies.
>> You can do this by using Reply-To-List or Reply-All.
>
> -derek
>
> --
>       Derek Atkins, SB '93 MIT EE, SM '95 MIT Media Laboratory
>       Member, MIT Student Information Processing Board  (SIPB)
>       URL: http://web.mit.edu/warlord/    PP-ASEL-IA     N1NWH
>       [hidden email]                        PGP key available
> _______________________________________________
> gnucash-user mailing list
> [hidden email]
> https://lists.gnucash.org/mailman/listinfo/gnucash-user
> -----
> Please remember to CC this list on all your replies.
> You can do this by using Reply-To-List or Reply-All.

_______________________________________________
gnucash-user mailing list
[hidden email]
https://lists.gnucash.org/mailman/listinfo/gnucash-user
-----
Please remember to CC this list on all your replies.
You can do this by using Reply-To-List or Reply-All.
Reply | Threaded
Open this post in threaded view
|

Fwd: How to close a financial year & how to keep 'earmarked' funds

Anita Graves-2


> Begin forwarded message:
>
> From: Anita Graves <[hidden email]>
> Subject: Re: How to close a financial year & how to keep 'earmarked' funds
> Date: 25 May 2017 at 6:05:27 PM GMT+3
> To: Derek Atkins <[hidden email]>
> Cc: doncram <[hidden email]>, DaveC49 <[hidden email]>, [hidden email]
>
> I am astounded at the amount of help you dear people offer!  Thank you very much.
>
> After glancing at all the replies, I have decided to back away from any idea of ‘closing the file’ for the previous year.  I say this because a) I am a novice at GnuCash and b) I have an accountant who will take a look at this later on and hopefully help out.  My only reason for wanting to ‘close’ the books was in order to properly carry forward any account balances.  In my case, I had some advanced fund balances in the expenses as subaccounts and was hoping there would be a ‘magical’ way to carry these balances forward, along with the balances forward in the asset, and equity accounts, but don’t think I know how to do that.  In the end, I just opened the same account tree in a new file and manually put in these balances.  I need help to know how to account for funds that are ‘earmarked’ (i.e., donated and contributed for specific purposes and which are not necessarily spent in one year, but carried forward, showing the expenses to draw them down as they occur, and other transactions affecting each of these ‘earmarked’ funds, accordingly.
>
> We are a religious organization, and an international one, so funds could be contributed ‘earmarked’ for a) the national fund; b) the international fund; c) repairs and maintenance of the meeting place; e) construction of a house of worship, etc.
>
> I would very much like to know how these funds should be entered in the accounts.  You take money from the asset accounts (checking or cash) and put it in special ‘earmarked’ expense subaccounts, then draw the funds toward zero as they are spent, and the balances go forward from year to year, if that is the case.
>
> Can anyone tell me how to do this?  I am in Cyprus, and we are a corporate entity, a limited company, not non-profit, not charitable.  We have no experience with taxes because our contributions are so small and no one has ever expressed a need to have their contributions exempted from taxation.
>
> Thanks to anyone who can help me on this
>> On 25 May 2017, at 5:50 PM, Derek Atkins <[hidden email]> wrote:
>>
>> doncram <[hidden email]> writes:
>>
>>> The advice to Anita to close a year's books, with warning present in the
>>> that doing so will destroy usability of reports henceforth, is quite
>>> alarming!  What is meant by "closing" in GnuCash-jargon seems different
>>> than what is meant more usually in accounting.
>>
>> AFAIK all the reports properly handle the Close Books tool.
>>
>>> In an entirely manual accounting, closing the books at the end of year or
>>> other period involves several steps:
>>> 1. Recognize accruals (non-cash entries) such as:
>>> **depreciation
>>> **allowance for bad debt (uncollectible accounts)
>>> **accrue payroll liabilities (assuming payroll date was not at the end of
>>> year, some liability of salaries and benefits needs to be accrued
>>> **accrue tax liabilities
>>> **other adjusting entries (to adjust assets and liabilities)
>>> 2. Make journal entries transferring expense and revenue account balances
>>> to income statement summary accounts, i.e. generating an income statement
>>> 3. Close the income statement summary accounts to retained earnings
>>> 4. Freezing forever the accounts for the period (in software, this would be
>>> done by putting a lock on any transactions before the new period)
>>>
>>> I am guessing that GnuCash does not support #4.
>>> I gather that in GnuCash, #2 and #3 don't need to be done, because the
>>> income statement report already exists.  And if they are done anyhow then
>>> usability of reports will be destroyed.  A user wants to be able to
>>> generate reports from prior years, e.g. for making comparisons.
>>> About #1, advising Anita how to proceed would require some more information
>>> on what the current balance sheet shows and what assets and liabilities
>>> need to be updated.
>>
>> The current tool just rolls up all the Income and Expense accounts into
>> Equity, basically zero-izing the Income and Expense accounts in the CoA
>> for the new period.  That's all it does.  It's useful if you want your
>> Income/Expense CoA balances to show the "current period" balance instead
>> of "since inception" balances.  And no, it's not required because all
>> the reports will properly deal with the behavior with or without closing
>> the books.
>>
>> You're correct that GnuCash does not support #4, and indeed no piece of
>> software with a writeable database can.  Those that claim to do so are
>> lying; what they mean is that you cannot do it through the UI, but that
>> doesn't mean you cannot do it.
>>
>>> Anita, does this begin to help?  And could anyone else clarify?  I
>>> personally am willing to help update the GnuCash documentation about
>>> closing, as this is important!
>>>
>>> cheers, Don
>>
>>> Please remember to CC this list on all your replies.
>>> You can do this by using Reply-To-List or Reply-All.
>>
>> -derek
>>
>> --
>>      Derek Atkins, SB '93 MIT EE, SM '95 MIT Media Laboratory
>>      Member, MIT Student Information Processing Board  (SIPB)
>>      URL: http://web.mit.edu/warlord/    PP-ASEL-IA     N1NWH
>>      [hidden email]                        PGP key available
>> _______________________________________________
>> gnucash-user mailing list
>> [hidden email]
>> https://lists.gnucash.org/mailman/listinfo/gnucash-user
>> -----
>> Please remember to CC this list on all your replies.
>> You can do this by using Reply-To-List or Reply-All.
>

_______________________________________________
gnucash-user mailing list
[hidden email]
https://lists.gnucash.org/mailman/listinfo/gnucash-user
-----
Please remember to CC this list on all your replies.
You can do this by using Reply-To-List or Reply-All.
Reply | Threaded
Open this post in threaded view
|

Re: How to close a financial year

Mike or Penny Novack-3
In reply to this post by doncram
On 5/24/2017 10:56 PM, doncram wrote:
> Thank you to David T. and to Michael D Novack and others for
> observations on closing.  Ideas from these and other comments that I
> can look for in past ("annual") discussions oughta be incorporated
> into documentation.  Some notes while this is fresh:
>

>
> *Note freezing is not the same...the prior years data stays in your
> system, and if it is not frozen then errors can be introduced, you
> might accidentally add or change a prior year transaction.  In
> commercial standard accounting, the past data is locked by password at
> least, and prior year info is only changed in exceptional
> circumstances (explain those...and how even for public restatements of
> financials, the past info is likely not changed).
>
> *I still am gathering that password-locking the past period data is
> not possible.

This is getting tiresome?

In ANY computerized system, "password locking" protects only against
accidental changes to the data. It does not protect against malicious
alteration by a person skilled in software. You underestimate the levels
of protection necessary to lock out somebody who can get physical access
to your machine << eg: can I interrupt the boot sequence and change the
boot order so instead of coming up in the usual operating system the
machine will boot from a different device and thus the operating system
of my choice? >> This problem is much more severe in the case of "open
software" where a far lower degree of skill is necessary to get around
password protection. But some of us have the skills and tools to get
around it even if not open software.

And since this began as a "close the books" discussion, whether prior
period data remains in the (new period) books is your choice. When I
discussed simply making read only copies and passing these out of the
bookkeeper's control I was demonstrating a work flow that could provide
proof* of alteration of prior data. Most people consider that enough,
and would prefer to be able to look at prior data (in the current books)
and not have to reload from a backup copy to do that. BUT, if that is
what you want, after closing the books you can create the new set of
books without prior data. That mimics the usual procedure of back in the
days of pen and ink on paper in bound volumes, where new volumes were
begun with the new accounting period. In other words, you are talking
about "work flow" matters and not the application itself.

And no, backup instruction do not belong in application guides. On our
computers, we have data created by lots of different applications. We
need backup procedures that back up ALL of our data. So discussion of
alternatives for backup belong in a "computer users" guide, not
application by application. Our working backups these days are usually
not on read only medium. But it wasn't that many years ago, before large
external drives became cheap, that I was burning even these to read only
DVD.

Michael

* Yes, I was sometimes called upon to do that, run byte by byte compares
to demonstrate that something HAD been altered.
_______________________________________________
gnucash-user mailing list
[hidden email]
https://lists.gnucash.org/mailman/listinfo/gnucash-user
-----
Please remember to CC this list on all your replies.
You can do this by using Reply-To-List or Reply-All.
Reply | Threaded
Open this post in threaded view
|

Re: How to close a financial year & how to keep 'earmarked' funds

Maf. King
In reply to this post by Anita Graves-2
On Thursday, 25 May 2017 16:05:27 BST Anita Graves wrote:

>
> I would very much like to know how these funds should be entered in the
> accounts.  You take money from the asset accounts (checking or cash) and
> put it in special ‘earmarked’ expense subaccounts, then draw the funds
> toward zero as they are spent, and the balances go forward from year to
> year, if that is the case.
>

Hi Anita,

I would record the earmarked contributions carried forward as Asset accounts,
not expense accounts.

IIRC, you have one bank account, but you have "imaginary" bank accounts to
restrict the funds within that bank account

I would have
Assets:Bank:Unrestricted
Assets:Bank:Restricted:National
Assets:Bank:Restricted:BuildingRepair
and so on.

In the chart of accoutns, you will be able to see the overall bank balance,
and each register will show you how much is earmarked for repairs etc.

When you reconcile, check the box to "include sub-acccounts"

Donations are Income:Donation:MoreBreakdownIfYouNeedIt -> Asset:Bank:Wherever

The only glitch is if you have a donor giving to 2 restricted funds at once -
it won't be clear in the reconcile dialogue box; it will show as 2
transactions that reconcile at the same time. (ie you tick one and the 2nd is
ticked automatically)

As you spend the restrictions, then you transfer from Asset:Bank:<x> to
Expenses:<y>

And I personally would not use new files year to year.  the reports can handle
the periods just fine - and it can be useful to compare 2 periods side-by-side;
you can't do that within GC if the data is split into different files.  

As ever, subject to local laws, customs & practices, which is beyond my ken.
YMMV etc.

HTH,
Maf.


_______________________________________________
gnucash-user mailing list
[hidden email]
https://lists.gnucash.org/mailman/listinfo/gnucash-user
-----
Please remember to CC this list on all your replies.
You can do this by using Reply-To-List or Reply-All.
Reply | Threaded
Open this post in threaded view
|

Re: How to close a financial year & how to keep 'earmarked' funds

Anita Graves-2
Maf thanks so much!!!  Helpful certainly.  But I don’t understand IIRC, YMMV and HTH.

How is it possible to keep the same file moving from one year to the next in the same file?  How can I turn over the accounts for one year only to an accountant?  How can you compare side by side if everything is in the same file?


> On 25 May 2017, at 6:28 PM, Maf. King <[hidden email]> wrote:
>
> On Thursday, 25 May 2017 16:05:27 BST Anita Graves wrote:
>
>>
>> I would very much like to know how these funds should be entered in the
>> accounts.  You take money from the asset accounts (checking or cash) and
>> put it in special ‘earmarked’ expense subaccounts, then draw the funds
>> toward zero as they are spent, and the balances go forward from year to
>> year, if that is the case.
>>
>
> Hi Anita,
>
> I would record the earmarked contributions carried forward as Asset accounts,
> not expense accounts.
>
> IIRC, you have one bank account, but you have "imaginary" bank accounts to
> restrict the funds within that bank account
>
> I would have
> Assets:Bank:Unrestricted
> Assets:Bank:Restricted:National
> Assets:Bank:Restricted:BuildingRepair
> and so on.
>
> In the chart of accoutns, you will be able to see the overall bank balance,
> and each register will show you how much is earmarked for repairs etc.
>
> When you reconcile, check the box to "include sub-acccounts"
>
> Donations are Income:Donation:MoreBreakdownIfYouNeedIt -> Asset:Bank:Wherever
>
> The only glitch is if you have a donor giving to 2 restricted funds at once -
> it won't be clear in the reconcile dialogue box; it will show as 2
> transactions that reconcile at the same time. (ie you tick one and the 2nd is
> ticked automatically)
>
> As you spend the restrictions, then you transfer from Asset:Bank:<x> to
> Expenses:<y>
>
> And I personally would not use new files year to year.  the reports can handle
> the periods just fine - and it can be useful to compare 2 periods side-by-side;
> you can't do that within GC if the data is split into different files.  
>
> As ever, subject to local laws, customs & practices, which is beyond my ken.
> YMMV etc.
>
> HTH,
> Maf.
>
>

_______________________________________________
gnucash-user mailing list
[hidden email]
https://lists.gnucash.org/mailman/listinfo/gnucash-user
-----
Please remember to CC this list on all your replies.
You can do this by using Reply-To-List or Reply-All.
Reply | Threaded
Open this post in threaded view
|

Re: How to close a financial year & how to keep 'earmarked' funds

Derek Atkins-3

On Thu, May 25, 2017 11:33 am, Anita Graves wrote:
> Maf thanks so much!!!  Helpful certainly.  But I don’t understand IIRC,
> YMMV and HTH.

If I Recall Corretly
Your Mileage May Vary
Happy To Help

> How is it possible to keep the same file moving from one year to the next
> in the same file?

Just keep entering data.

>   How can I turn over the accounts for one year only to
> an accountant?

This is certainly harder if your data file contains multiple years of
data.  If you want to supply a gnucash database file then you would need
to supply everything to your accountant.  Otherwise, you could generally
just submit an Income Statement, Balance Sheet, and a full transaction
report for the period.

>   How can you compare side by side if everything is in the
> same file?

Generate two reports, one for e.g. 1/1/2015-1/1/2016, and one for
1/1/2016-1/1/2017 and compare.

-derek

>
>> On 25 May 2017, at 6:28 PM, Maf. King <[hidden email]> wrote:
>>
>> On Thursday, 25 May 2017 16:05:27 BST Anita Graves wrote:
>>
>>>
>>> I would very much like to know how these funds should be entered in the
>>> accounts.  You take money from the asset accounts (checking or cash)
>>> and
>>> put it in special ‘earmarked’ expense subaccounts, then draw the funds
>>> toward zero as they are spent, and the balances go forward from year to
>>> year, if that is the case.
>>>
>>
>> Hi Anita,
>>
>> I would record the earmarked contributions carried forward as Asset
>> accounts,
>> not expense accounts.
>>
>> IIRC, you have one bank account, but you have "imaginary" bank accounts
>> to
>> restrict the funds within that bank account
>>
>> I would have
>> Assets:Bank:Unrestricted
>> Assets:Bank:Restricted:National
>> Assets:Bank:Restricted:BuildingRepair
>> and so on.
>>
>> In the chart of accoutns, you will be able to see the overall bank
>> balance,
>> and each register will show you how much is earmarked for repairs etc.
>>
>> When you reconcile, check the box to "include sub-acccounts"
>>
>> Donations are Income:Donation:MoreBreakdownIfYouNeedIt ->
>> Asset:Bank:Wherever
>>
>> The only glitch is if you have a donor giving to 2 restricted funds at
>> once -
>> it won't be clear in the reconcile dialogue box; it will show as 2
>> transactions that reconcile at the same time. (ie you tick one and the
>> 2nd is
>> ticked automatically)
>>
>> As you spend the restrictions, then you transfer from Asset:Bank:<x> to
>> Expenses:<y>
>>
>> And I personally would not use new files year to year.  the reports can
>> handle
>> the periods just fine - and it can be useful to compare 2 periods
>> side-by-side;
>> you can't do that within GC if the data is split into different files.
>>
>> As ever, subject to local laws, customs & practices, which is beyond my
>> ken.
>> YMMV etc.
>>
>> HTH,
>> Maf.
>>
>>
>
> _______________________________________________
> gnucash-user mailing list
> [hidden email]
> https://lists.gnucash.org/mailman/listinfo/gnucash-user
> -----
> Please remember to CC this list on all your replies.
> You can do this by using Reply-To-List or Reply-All.


--
       Derek Atkins                 617-623-3745
       [hidden email]             www.ihtfp.com
       Computer and Internet Security Consultant

_______________________________________________
gnucash-user mailing list
[hidden email]
https://lists.gnucash.org/mailman/listinfo/gnucash-user
-----
Please remember to CC this list on all your replies.
You can do this by using Reply-To-List or Reply-All.
Reply | Threaded
Open this post in threaded view
|

Re: How to close a financial year & how to keep 'earmarked' funds

Maf. King
In reply to this post by Anita Graves-2
Copying to list...

On Thursday, 25 May 2017 16:33:39 BST you wrote:
> Maf thanks so much!!!  Helpful certainly.  But I don’t understand IIRC, YMMV
> and HTH.

Mostly internet abbreviations.
If I Recall Correctly
Your Mileage Might Vary
Hope That Helps

>
> How is it possible to keep the same file moving from one year to the next in
> the same file?  How can I turn over the accounts for one year only to an
> accountant?  How can you compare side by side if everything is in the same
> file?

My accountant doesn't want to see my GC file, he wants reports that give the
profit & loss figures, balance sheet, account totals etc.  I do also do a full
transaction report, but he doesn't do any data entry / editing, just the
incorporating into the standard format for submission to the government.  Your
auditing needs may of course be different.

You can set the date range (or effective date for balance sheet / account
summary etc) for pretty much any of the reports.  So you just run the report
for say 2016 or may-august 2015 or whatever.  I find the transaction report to
be surprisingly useful as a start point for many things.

There is also a multi-column report - which is a "container" for any other
reports - so you can have say 3 balance sheets side-by-side, or run income
year to date  subtotalled by month next to the same thing for last year, for
example.

Maf.


> > On 25 May 2017, at 6:28 PM, Maf. King <[hidden email]> wrote:
> >
> > On Thursday, 25 May 2017 16:05:27 BST Anita Graves wrote:
> >> I would very much like to know how these funds should be entered in the
> >> accounts.  You take money from the asset accounts (checking or cash) and
> >> put it in special ‘earmarked’ expense subaccounts, then draw the funds
> >> toward zero as they are spent, and the balances go forward from year to
> >> year, if that is the case.
> >
> > Hi Anita,
> >
> > I would record the earmarked contributions carried forward as Asset
> > accounts, not expense accounts.
> >
> > IIRC, you have one bank account, but you have "imaginary" bank accounts to
> > restrict the funds within that bank account
> >
> > I would have
> > Assets:Bank:Unrestricted
> > Assets:Bank:Restricted:National
> > Assets:Bank:Restricted:BuildingRepair
> > and so on.
> >
> > In the chart of accoutns, you will be able to see the overall bank
> > balance,
> > and each register will show you how much is earmarked for repairs etc.
> >
> > When you reconcile, check the box to "include sub-acccounts"
> >
> > Donations are Income:Donation:MoreBreakdownIfYouNeedIt ->
> > Asset:Bank:Wherever
> >
> > The only glitch is if you have a donor giving to 2 restricted funds at
> > once - it won't be clear in the reconcile dialogue box; it will show as 2
> > transactions that reconcile at the same time. (ie you tick one and the
> > 2nd is ticked automatically)
> >
> > As you spend the restrictions, then you transfer from Asset:Bank:<x> to
> > Expenses:<y>
> >
> > And I personally would not use new files year to year.  the reports can
> > handle the periods just fine - and it can be useful to compare 2 periods
> > side-by-side; you can't do that within GC if the data is split into
> > different files.
> >
> > As ever, subject to local laws, customs & practices, which is beyond my
> > ken. YMMV etc.
> >
> > HTH,
> > Maf.


--
Maf. King
PGP Key fingerprint = 8D68 A91F 733B 2C1F 43B7  2B7C E591 E8E1 0DE7 C542


-----------------------------------------
--
Maf. King
PGP Key fingerprint = 8D68 A91F 733B 2C1F 43B7  2B7C E591 E8E1 0DE7 C542



_______________________________________________
gnucash-user mailing list
[hidden email]
https://lists.gnucash.org/mailman/listinfo/gnucash-user
-----
Please remember to CC this list on all your replies.
You can do this by using Reply-To-List or Reply-All.
Reply | Threaded
Open this post in threaded view
|

Re: How to close a financial year & how to keep 'earmarked' funds

Mike or Penny Novack-3
In reply to this post by Anita Graves-2
On 5/25/2017 11:05 AM, Anita Graves wrote:
> I am astounded at the amount of help you dear people offer!  Thank you very much.
>
> ....... My only reason for wanting to ‘close’ the books was in order to properly carry forward any account balances.  In my case, I had some advanced fund balances in the expenses as subaccounts and was hoping there would be a ‘magical’ way to carry these balances forward, along with the balances forward in the asset, and equity accounts, but don’t think I know how to do that.
Stop right there.

I think you are mishandling how you are accounting for "dedicated
donations" (what I would call "restricted donations"). Formally
restricted donations are technically a liability, but you probably don't
want to go there. And you probably don't have separate bank accounts for
each fund. One (relatively) easy way to do this:

a) Make a parent for your bank account and make what is now your bank
account a child of that, Then create child accounts for each special  
fund where the money is kept in your main bank account. You will be able
to reconcile against the statements from your bank by looking at the
parent total. You may have a little more work to do when entering a bank
deposit if being new, you don't want to mess with transactions split on
both sides (that's tricky). In that case, immediately after the deposit
(split on the credit side) you enter a transaction to transfer that
portion of the deposit that was restricted to the proper child(ren) so
could be split debit  side.

b) Each time you pay an expense that qualifies for use of some
restricted fund money you again have a little extra work. The actual
check would be entered in the main bank account (debit the expense
account) but also transfer back that amount from the restricted fund to
the main account. Again, use two transactions if you find a two way
split daunting.

c) The adjustments (transfers into and out of the restricted children)
could be done periodically instead of as each happens. That is a "work
flow" choice. In that case you would use the total for the period
(quarter?) of "donations restricted building expenses" to transfer from
main account to the "building expense fund" child and the period total
of "building expenses" to transfer back from the "building expense fund"
to main checking. use your judgement based on the volume of transactions.

This DOES carry over accounting periods since accounts of type asset,
liability, and equity, are "standing" accounts.

Note that a Balance Sheet report will show your board what is the
balance of each of these dedicated funds at any given point in time.

Michael


_______________________________________________
gnucash-user mailing list
[hidden email]
https://lists.gnucash.org/mailman/listinfo/gnucash-user
-----
Please remember to CC this list on all your replies.
You can do this by using Reply-To-List or Reply-All.
12