Before You Start

This guide assumes you have administrator access to QuickBooks Online and understand the impact of prior-period adjustments.

Overview

10 min
Estimated Time
Intermediate
Difficulty
As Needed
Maintenance

What You’ll Learn

  • Understanding the purpose of the QuickBooks Closing Date
  • Safely unlocking a closed period in QuickBooks Online
  • Making prior-period adjustments without data corruption
  • Re-closing the books and documenting changes in the audit log

1. Understanding the Closing Date

The Closing Date in QuickBooks is a critical feature to maintain financial accuracy:

Key Purposes

  • Prevents accidental changes to past financial periods.
  • Ensures reports like Balance Sheet and P&L remain consistent.
  • Locks down periods after taxes or external reporting.

Risks of Improper Bypassing

  • Inaccurate financial statements.
  • Difficulty reconciling accounts.
  • Potential audit complications.

2. Identifying the Problem

QuickBooks prevents changes to past periods using a ‘Closing Date’ with an optional password.

Why it’s useful:
  • Maintains data integrity.
  • Prevents accidental modifications.
  • Ensures financial report accuracy.
Challenges it creates:
  • Blocked prior-period adjustments.
  • Forgotten passwords can halt work.
  • Requires careful management.

Expert Tip

Expert Tip: Never bypass the closing date without proper authorization and documentation. This could lead to serious accounting errors and discrepancies that are difficult to trace and correct. Always understand the full implications of your changes.

3. Step-by-Step: Bypassing and Adjusting

Here’s the secure process to temporarily unlock a period, make adjustments, and re-close.

Here is an example of a journal entry often used for prior-period adjustments.

{
  "transaction_id": "JE-20241231-001",
  "date": "2024-12-31",
  "description": "Adjusting entry for prior period revenue underestimation",
  "debits": [
    {"account": "Accounts Receivable", "amount": 750.00}
  ],
  "credits": [
    {"account": "Sales Revenue", "amount": 750.00}
  ]
}

4. The Unlocking Process

  1. 1

    Locate Closing Date Settings

    In QuickBooks Online, navigate to the Gear icon > Account and Settings > Advanced > Accounting section. Find “Close the books.”

  2. 2

    Temporarily Disable Password

    If a password is set, click ‘Edit’, then temporarily remove the password. Note the original closing date before proceeding.

  3. 3

    Make Necessary Adjustments

    Carefully enter your journal entries or transactions for the prior period. Double-check all dates and amounts for accuracy.

Common Error: Incorrect Date Range

Ensure your adjustments are dated within the prior period you intend to modify, not the current period. This keeps your reporting clean and avoids issues with current financial statements.

5. Re-closing and Documentation

Post-Adjustment Checklist

  • Review updated financial reports for the affected period
  • Verify audit log for all changes made during the open period
  • Reset the Closing Date and its password in Account and Settings
  • Communicate changes and reasons to relevant stakeholders

Need Help?

Get Support

Trouble with a specific adjustment or forgotten Closing Date password? Our expert team can assist with complex prior-period corrections.

Contact Us