QuickBooks Desktop allows you to close your books when the fiscal year ends. QuickBooks comes with a feature that creates automatic adjustments to prepare for coming year.

Year-end adjustments QuickBooks makes automatically

QuickBooks processes various year-end adjustments depending upon the starting month of your fiscal year.

  • QuickBooks manages your income and expense account at year-end to neutralize them so that you can initiate your new fiscal year with zero net income.
  • QuickBooks creates an adjusting entry to your net income. For example, when your profit for previous year was $12,000, your Balance sheet in equity section displays a line for a net income of $12,000 on the end date of your fiscal year.
  • On the starting day of your new fiscal year, QuickBooks adds your retained Earnings equity account for the last year’s net income and reduces your net income with equal amount. Doing this will start new fiscal year with zero net income.

Before starting to close your books, you need to keep following things in your mind:

Advantages to closing your books
  • Restricted Access: You may create a closing date password to prevent any kind of access to data from the before accounting period, containing the information of each transactions. You should know the exact closing date password and have required permissions to make any kind of changes or remove a transaction in a closed period.
  • Reporting: Any modifications made after closing date to transactions having before or after date of closing date will show up in the Closing Date Exception Report.
  • Run reports by going into Reports > Accountant & Taxes and then select Closing Data Exception Report.
  • The Closing Date History displays ongoing and previous closing dates and the user who imposed closing date.
Advantages to not closing your books
  • Detail: The last year’s data can easily be accessed including details of each transaction.
  • Reporting: A comparative reports can be created between current and last year.

Closing Entries

  • Closing entries are basically the ones that were made at the end of the fiscal year for transferring your income and expense accounts to retained earnings. The main aim is completely neutralize your Income and Expense accounts and then increase the net income of your fiscal year to Retained Earnings.
  • Closing entries can only be created at the end of your fiscal year to take balance to Retained Earnings from Income and Expense accounts. When the books are closed, you shouldn’t be entering any entry for the fiscal year. Sometimes you might be restricted from creating any entry even if it corrects or increases accuracy of your books. With QuickBooks, you can always enter transactions that can have impact on your closed fiscal year’s balance but it either says you that it isn’t suggested or it asks for closing date password if you have one.
  • QuickBooks software doesn’t have any original transaction to close entries that are created automatically. QuickBooks calculates the adjustments every time you report (for example QuickReport of Retained Earnings) however these transactions can’t be QuickZoomed, like the ones you recorded manually. These adjustments are referred as Closing Entry that is not a real transaction in QuickBooks Desktop.

Reach Us For QuickBooks Assistance

Hopefully, you find this article helped you in understanding how to close your books in QuickBooks Desktop. In case you are facing any kind of difficulty during the process, contact us for technical assistance. For this, you just need to dial our toll-free QuickBooks Support Phone Number +1-866-701-7446 for instant support.

Close Your Books In QuickBooks Desktop

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