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, and then enter the closing date (probably the end of the most recently completed year) in the Date Through Which Books Are Closed box. To use a closing password, click the Set Password button, and use the dialog box that QuickBooks displays to create the closing password.