Caesar's Brook January 2009 Newsletter

Unlike many accounting systems, QuickBooks does not require you to close your books at the end of a fiscal year. Based on your company's fiscal year start month, QuickBooks automatically zeros out your income and expense accounts and increases the Retained Earnings equity account by the amount of the previous year's net income. However, in most cases, you will be turning your accounting data over to your accountant who will have additional adjusting entries required to complete your year-end. Once you have provided your accounting data to your accountant, you will want to be careful not to make changes to transactions in the previous year. The best way to guard against making changes to the previous period is to set a closing date in your QuickBooks file.

Advantages to Setting a Closing Date

Restricted Access - When you set a closing date, you can restrict which users can change or delete transactions dated prior to the closing date. If you don't set a password, users with permission to change transactions will be warned that they are changing a transaction in a closed period but will be able to click through the warning. If you set a password, users with permission will be required to enter the password prior to changing the transaction.

Reporting - Any changes made after the closing date to transactions dated on or before the closing date will appear in the Closing Date Exception Report. This report, available from the Accountant section of the Reports menu, enables you to track subsequent activity in a closed period, listing all new and changed transactions.

Detail - Setting a closing date does NOT change the level of detail available to you in your QuickBooks file. You can continue to view and report on last year's data.

When to Set Your Closing Date

If you will be giving your accountant a copy of your QuickBooks file, when you set your closing date will depend on how you provide your accountant with the data. If you give them a copy of your QuickBooks Company file (.QBW) or a QuickBooks backup file (.QBB), you will want to set your closing date when you give them the copy. That will ensure that you do not inadvertently make changes to information that you have already provided to them.

If you give your accountant an Accountant's copy, you will set a dividing date when you create the Accountant's copy and set your closing date after your Accountant has returned the file and you have merged their changes with your working file. Follow the directions your accountant provides.

How to Set Your Closing Date

The Closing Date is a Company Preference accessible from the Company pull down menu. You must be logged in as Admin and must be in single user mode to set the closing date. On the Set Closing Date screen enter the last day of your previous fiscal year. For example, if you have a calendar fiscal year, when you are ready to set your closing date for 2008, enter 12/31/2008. Setting a password is optional, but strongly recommended. If you are in a multi-user environment, and this is the first time you have set a closing date, you will want to review your user permissions to ensure that they are appropriately set.