What happens when you officially close the books in QBO?

Question

BlackTom AI · Accepted Answer

When evaluating what happens after you officially close the books in QBO, it's helpful to examine what each option implies about the closing process.
Option A: 'When you close the books, it automatically generates tax reports for the period.' This is not how the standard closing process works in QuickBooks Online; closing the books is about finalizing the period's accounting, not generating tax reports automatically.
Option B: 'When you officially close the books in QBO, it locks the accounting period, preventing any changes to transactions or financial reports for that period.' This aligns with the typical purpose of closing a period: to prevent retroactive edits and ensure the period's data remains as reported, preserving the integrity of financial statements.
Option C: 'When you close the books, it transfers all balances to the next fiscal year.' Closing a period does not automatically roll balances into the next year; carrying forward balances is a separate process and depends on the accounting system's setup and the nature of the accounts.
Option D: 'When you close the books, it deletes all transactions for the closed period.' Deleting transactions contradicts the goal of preserving historical accuracy; closing should prevent changes but not erase data.
In summary, option B captures the core effect of closing a period in QBO—locking the period to prevent further modifications to transactions and reports—while the other options describe actions that are not part of the standard closing behavior or misrepresent the outcome of closing.

QBO25E1 - QuickBooks Online Module 18 Quiz

What happens when you officially close the books in QBO?

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