Using a Closing Password in QuickBooks 2016
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 that person 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 click the Set Date/Password button so QuickBooks displays the Set Closing Date and Password dialog box. You enter the closing date (probably the end of the most recently completed year) in the Closing Date text box and then enter the password (twice), once into the Closing Date Password and the Confirm Password text boxes.
Select the Exclude Estimates, Sales Orders and Purchase Orders from Closing Date Restrictions check box to not lose access to these transactions as part of the closing.
Do not set a closing date and password on a QuickBooks file you want to send to your accountant so he or she can prepare your tax return. Your tax accountant will probably need to make changes to your QuickBooks file to sync things up between your records and your tax return. You want therefore to “lock” the preceding year only after your tax return is complete.