Using a Closing Password
QuickBooks doesn’t require you to or even let you “close” months and years, the way old manual accounting systems did. (When you “closed” an old accounting period, you actually zeroed-out the revenue and expense accounts and transferred the net amount to the owner’s equity accounts.)
However, QuickBooks does let you use a closing date and password. The closing date sort of prevents someone from entering transactions earlier than the specified date. If you set a closing password, for example, someone needs to supply that password before entering a transaction or changing a transaction dated before the closing date. If you don’t set a closing password, someone trying to enter or change a transaction dated before the closing date is warned, but he or she can still create or change the entry.
To set a closing date, choose Edit⇒Preferences, click the Accounting icon, click the Company Preferences tab, click the Set Date/Password button, and then enter the closing date (probably the end of the most recently completed year) in the Closing Date box and then enter the password (twice), once into the Closing Date Password and Confirm Password boxes. Note: QuickBooks lets you check the Exclude Estimates, Sales Orders and Purchase Orders from Closing Date Restrictions box to not lose access to these transactions as part of the closing.