How do I close my account in GNUCash

Question

I am not a Accountant or GNUCash expert so I am seeking help. Let me set the stage. I am from India, here we have investment option called Fixed Deposit abbreviated as FD (in USA I think they call it as Certificate of Deposit).

We invest a desired amount for a period, usually it will be for 12 months, and this deposit will generate Interest. The Interest is calculated Quarterly, Semi-Annually and Annually. Since Quarterly is more profitable everyone will opt it.

The payment option can have cumulative or payout. In Cumulative interest is calculated quarterly and payment is made at the end of the period. In payout interest is calculated quarterly and payment is made quarterly.

At the end of the period, we can renew the FD or close it. Following is the example of what I do. Let say I invest 100 Rupees on Jan 1st at interest rate 7% for 12 months, every quarter I will get the interest of 1.75 and on Dec 31st I will renew the FD. Since I renew the FD, it will change to next number series, say the account number for my FD is 1234/1 when I renew it will change to 1234/2.

Here comes my problem I need a solution. I have around 30 FDs now all in small amounts and I am started tracking them in GNUCash. Since the number of FD is high, I’m closing the FDs and combining the amount and starting the new FD.

Now let me explain how I track my FDs in GNUCash. I have the account tree as Following.

Asset->Fixed Deposit->Bank Name->FD Holder Name->FD Account Number

Expenses->TAX->TDS->FD TDS->Bank Name->FD Holder Name->FD Account Number

Income->Interest Income->FD Interest->Bank Name->FD Holder Name->FD Account Number

I debited Asset as opening balance. When I receive Interest, I credit Income and debit my Bank account. For the Interest received they will charge 10% TDS for that I will debit TDS and credit my Bank.

Now when I close the FD the principal will automatically go to my bank account. I can not just delete the account in GNUCash right. How do I properly in GNUCash so that it will not affect my end of financial year financial statements. Hope what I say makes sense to you guys.
Thanks
Assets Account Tree
Expenses Account Tree
Income Accounts Tree

Answer 1

When you close the Fixed Deposit account and the principal is returned to your bank account, you're essentially exchanging one form of asset (the FD) for another (extra money in your bank account). You can show this in GnuCash by crediting the FD account by the amount of principal being returned, and debiting your bank account.

After this, the FD account will still exist in GnuCash and it will have historic transactions you can look at, but the current value of the account will be zero (assuming that you closed the FD and the whole amount of principal was returned to you).

If, instead, you renew or "roll over" the FD by closing one FD and immediately investing in another, you can record this in GnuCash with a transaction that credits the FD that you're closing (reducing its balance to zero) and debits the new FD account. There's no debit or credit to your bank account this time because the principal was not returned to you.