How a Period closes
A month soft-closes on its own once every account you reconcile has been reconciled through its end. A year is finalized deliberately, once the return is filed.
Before you start
Your books have two boundaries, about sixteen months apart, and they do different jobs.
A Period is one month. It soft-closes by itself, with no ritual to remember: once every account that participates has been reconciled through the month’s end date, the month is closed.
A year is finalized separately and deliberately, once the return has been filed. After that nothing may touch it at all.
Which accounts hold the month open
An account participates in the close once it has ever been reconciled — not because of what type it is.
This configures itself. Your operating account is in, because you reconcile it every month. Cash on Hand is out, because there is no statement to reconcile it against. The obvious alternative rule — every bank account — is a trap: petty cash would hold every month open forever while appearing to work.
What each line blocks
| Soft-closed Period | Finalized year | |
|---|---|---|
| Change what it already said | Refused | Refused |
| Void an entry dated inside it | Refused | Refused |
| Edit a document whose entry falls in it | Refused | Refused |
| New entries dated into it | Allowed | Refused |
| Adjusting Entries | Allowed | Refused |
A soft-closed Period still takes new entries. A February Bill arriving in March belongs in February, and blocking it would force the misstatement accrual accounting exists to avoid. An unpaid Bill never touches a bank account, so it cannot invalidate the reconciliation that closed the month. What the close prevents is figures you have already reported changing without anyone noticing.
Adjusting Entries live between the two lines
Between the month closing and the year being finalized sits the work a CPA does: corrections dated 31 December and entered the following April.
An Adjusting Entry is always additive. It never alters the entry it corrects, and it carries its own marking so reports can separate it from the original year’s activity. A reclassification needs nothing special — “move $4,200 from Office Supplies to Equipment” is an ordinary balanced entry, and because every report reads the ledger, the correction reaches all of them. The source document keeps its original category, which cannot leak into a profit and loss.
Writing one needs a Role holding the adjusting-entries permission. CPA has it; Staff does not.
Steps
- Reconcile each account through the month’s end date. See Reconcile a bank statement.
- The month soft-closes when the last one is done. There is nothing to press.
- When the return has been filed, open Accounting › Periods and finalize the year.
- Read the confirmation. Finalizing is irreversible.
Good to know
Finalizing never happens on its own. If it fired on 31 December it would lock the year four months before the CPA’s adjustments arrived, blocking precisely what it exists to come after. It is the one thing in the close that has to be remembered.
A correction found after a year is finalized — an amended return, say — is posted into the current year, not the closed one.