In accounting, accounts are closed every financial year. This can be a calendar year from January to December, or in between years, like from July 2010 to June 2011.
Either way, a financial year is mostly for a period of 12 months. Some exceptions include, up to 18 months for a newly incorporated company. A company that decides to change it’s year end may, on the other hand, have less than 12 months.
A common requirement, regardless of the number of months, is that accounts must be closed, and a new set of accounts be created for the new financial year.
The process of closing an account involves zeroing out the income and expense accounts as well as carrying forward the balance sheet account balances.
In MYOB, while you can have up to 3 financial years open, you will still need to close the earliest year at some point. This is usually done after an audit has been completed and income tax returns have been submitted.
The process of closing the financial year in any accounting system, whether manual or computerized, involves certain steps that should be taken, including ensuring that the balances in your accounts are the same as the balances in your audited accounts.