What book-keeping practice is best to keep each year's transactions balanced within that year?
This question seeks specifically an answer that benefits from the consensus of the accumulated wisdom of book-keeping. I seek to know in which accounts I should record opening and closing transactions for each year, to keep the books flexible in the way described below.
I am familiar with double-entry book-keeping concepts, and am using that system for my personal finances. Now I want to introduce transactions that give me the option of examining a range of past transactions, chosen at the time I do some report, stopping an arbitrary number of years in the past, and having the included years balance to zero as normal.
So I would like to have each financial year's ledger be self-contained: zero in all accounts at the start, then the initial transactions set opening balances brought forward from the previous year, and the final transactions close accounts back to zero.
What I have in mind would look something like this:
FY 2009–2010 [initial balances zero] 2009-07-01 Opening balance [some set of transactions that move quantities to how they actually were on this date] 2009-07-04 Cheese […] 2009-08-12 Loan repayment […] [… more normal transactions …] 2010-06-30 Closing balance [some set of transactions that move quantities to leave all accounts zero except for Equity] FY 2010–2011 [initial balances zero] 2010-07-01 Opening balance […] [… more normal transactions …] 2011-06-30 Closing balance […]
With each year's books tracked that way, I can allow my reporting program to just focus on the data for the years I'm interested in for any given purpose. Knowing that each year begins from a clean slate means that I don't need to point my accounting program at the entire lot, just those I want a report of.
So that's why I am mulling how to get those opening and closing transactions right, and which accounts should be involved.
But maybe I've misunderstood what's feasible for book-keeping. Is there a better way to keep the books manageable without needing to always consider every account from the beginning of time?