The Closing Date in QuickBooks is a setting that indicates the date through which your books have been closed. Normally, books are considered closed after they’ve been reviewed, all adjusting entries have been made, and reporting has been completed to investors, lenders, or tax authorities.
It’s used to protect data from inadvertent modification by making it more difficult – but not impossible – for you to change or delete transactions on or before the closing date. Unlike other accounting systems that require you to close your books and make it impossible to add, change, or delete transactions in closed periods, QuickBooks offers the flexibility for you to restrict access to periods you or your accountant have determined are closed and to later remove that access restriction, a process commonly called “re-opening your books.”
It’s important to understand that setting a Closing Date doesn’t result in recording any transactions; QuickBooks automatically makes certain adjustments, such as increasing your Retained Earnings account by the amount of your prior year’s net income on the first day of your fiscal year. The Closing Date is only an access restriction. You can control how strict that restriction is by whether you set a Closing Date Password.
To set the Closing Date, click on the Accounting sub-menu of Edit->Preferences… menu selection and choose the Company Preferences tab. You’ll see the current Closing Date, if any.
Click on the Set Date/Password button to view the Set Closing Date and Password window.
Like many functions in QuickBooks, there are multiple ways to get to this same point. The Company->Set Closing Date… menu choice will take you to the window to make this setting. You can also click on the Company->Set Up Users and Passwords->Set Up Users… menu selection, followed by clicking on the Closing Date… button.
With either method, you’ll end up at the the Set Closing Date and Password window.
You can set or change your Closing Date and the Closing Date Password on this window. If you attempt to enter any transaction with a date on or before the Closing Date, QuickBooks will display either a warning or a confirmation window, depending on whether you set a Closing Date Password. If you set a Closing Date Password, you’ll have to first correctly enter it to record the transaction.
Here’s the warning you’ll see when attempting to record a transaction dated on or before the Closing Date if you do not enter a Closing Date Password:
You’ll still be able to record the transaction by clicking Yes. The access restriction is simply forcing an extra step.
Here’s the more strict limitation you’ll see when attempting to record a transaction dated on or before the Closing Date if you do enter a password:
You’ll have to correctly enter the password to record the transaction, so the access restriction is greater.
Since only the QuickBooks Administrator or a user with External Accountant privileges can set QuickBooks preferences, it’s not possible for users without those higher privileges to first remove the Closing Date or change the Closing Date Password to bypass the access restriction. That insures that, when combined with user restrictions, the Closing Date restrictions are effective.