gnucash/src/doc/books.txt

                Books / Accounting Periods
                --------------------------
                 Implementation Overview

                Linas Vepstas December 2001
                 Last Updated July 2003


A top, unimplemented request for GnuCash is the ability to 'close 
the books', that is, to add support for 'accounting periods'.
Partial support for books has been added to the GnuCash engine; 
and a GUI is partially finished.  This file reviews the 
implementation design choices and the current design status.

Definition
----------
An accounting period or 'book' is a set of accounts and transactions
that, once closed, must never be modified again.   Books are usually
closed once a quarter, or once a year.  Generating a report from a 
closed book tells you how well you did for that year (or quarter).
The provision against modifying a closed book helps ensure correctness,
and discourages cheating.   Note that the closing balances of a closed
book must be carried forward as the opening balance in the next book.

Requirements
------------
Must have good performance (large data files usually mean poor performance).
Use the idea of 'books' to prevent file bloat.  Must have access to 
historical data.  Must be able to create bar-charts, graphs, reports
of multi-year data (i.e. create reports spanning multiple books).

Status
------
A fair amount of what is required to support books can be found in
the file src/engine/gnc-book.c.  The actual implementation used is 
"Plan A" from the list of choices below.  See also "Implementation
Notes" at bottom for the current status.

Note that the correct handling of depreciation, capital gains and
other similar accounting concepts requires that 'lots' be supported
by the engine, and in turn, handled correctly by the 'books' 
infrastructure.  Currently, 'lots' are incompletely supported by 
the engine, and this causes the book implementation to be broken in 
a certain fundamental sense.  See 'lots.txt' for details.


Possible Solutions
------------------
Listed in order from worst to best:

Plan F:
-------
Simply 'delete' old transactions, and adjust the equity to make up for 
this.  More specifically: Split one file into two, with only 'old' 
transactions in one, and only 'new' transactions in the other.

I believe that this can be 'easily' coded by creating a second instance
of a gnc-book structure in memory, copying all the account info 
into it, and using Query.c to copy in only the 'old' transactions.
(and v.v. using Query.c to delete the old transactions in the other copy.)
Then, look up the ending balance on all asset/liability accounts
in the 'old' book, and create new transactions in the 'new' book
that transfers that balance amount to an equity account.
The transfer description is, of course, 'opening balance'.
Balances of income/expense accounts are zeroed out.

I believe this code would be easy to write in C or scheme. There may be
a few bugs/difficulties lurking in gnc-book that might trip things up.
Also, at a minimum, there needs to be a GUI dialog, asking for the 
date on which to close the books.

(A fancy but optional GUI dialog/wizard might ask 'which equity 
account to transfer the opening balances, and what the description 
should say. This GUI is optional, since, after all, these can be 
tweaked by hand, and its only done once a year or once a quarter.)

(An even fancier GUI would remember how often the books should close:
1,2,3,4 times a year, 12 times a year, whatever, and 'remind' you 
when that happens.)

(Another 'fancy' feature might be to not allow user to close book until
all 'old' transactions have been cleared/reconciled.  But that might be 
a bit much for non-bank accounts).

Pros & Cons of plan F:
----------------------
pro: simple. The simplest option.
pro: truncated file loads much faster
pro: old/irrelevant accounts can be safely deleted from newest file
     (while still being preserved in old files).
con: impossible to generate 5 year reports, multi-year graphs.  This
     would really hurt, esp, when tracking stocks/mutual funds/retirement
     accounts over a number of years.

I think this last one is the Achilles heel, the torpedo in the rudder
that sinks the boat.


Plan D:
-------
As above, but instead of deleting, add a kvp to each transaction stating
'/book/closed-on=12.31.2000'.  Then modify the default query for the 
registers so that the only displayed transactions are those that are *not*
part of a closed book.  Modify the Query GUI dialog to add 'book' as 
a query parameter. 

pro: easy access to historical record
con: slow loads; file size not reduced.
con: dealing with opening balances, equity, is icky.
con: can't delete/hide old/stale accounts.

We move on....

Plan C:
-------
As in plan F, but instead of creating two books, clone the account tree
into two: 'old' and 'new'.   The old and new accounts are identical, 
except that they get different guid's.  Every  account in the old 
tree gets a kvp in it: '/book/closed-on=12.31.2000'.   We don't copy
or delete any transactions; instead, we reclassify them: Old transactions 
are transfers between old accounts, new transactions are transfers 
between new accounts. 

The account summary needs to be modified to show only 'new' accounts 
by default.  The transfer-from pop-down needs to be modified to show 
only 'new' accounts only, and never the old accounts.

Transfers between closed and open accounts are never allowed (this is 
validated/forced in the engine).  Opening balances are handled just as 
in plan 'F'.   User can only view data in closed books, and not change 
it.  

If we allow books to be re-opened, then the 'starting balance' equity 
transfers must be deleted.   We can save 're-opening' for some future 
day.

The 'starting balance equity transfers' must have a kvp pair in them: 
'/book/closing-balance-of-account-guid=0xdeadbeef'.
This way, we know that this transaction is associated with the closure
of the book on some specific account, and that way, we can find this
transaction someday in the future, if we ever need to.

Each new account needs to point back at the copy that is its 'old' self. 
(these don't have to be C pointers, they could be some suitably clever
kvp: '/book/previous-guid=0xdeadbeef')  This continuity is needed in order
to be able to create reports that scan over multiple books.  The Query.c
interface needs to be modified so that it searches only new accounts,
or it searches new accounts *and* their corresponding 'old' copies.

(There are three ways to deal with this account continuity issue:
 \\ don't deal with it in query.c:  force various GUI dialogs to explicitly 
    formulate queries involving the /book/previous-guid string.  
    but this gets messy in the GUI's.  May lead to excess cut-n-paste
    of similar code between different GUI's.
    
 \\ 'hide' the distinction between 'old' and 'new' in query.c: 
    the users of query.c need only to specify a boolean flag: search 
    closed books: yes/no.  However, this is conceptually ugly, and 
    prevents query from doing low-level queries on specific 
    books.
    
 \\ create query utility wrapper/pre-processor that takes a query,
    and then modifies it to search through closed books as well.
    This is the 'cleanest' solution. ??
    
 \\ All these are delicate, and need a little more thought and 
    exploration. Goal is to simplify queries, not burden the system 
    with cryptic, complex code.
)

I believe that if we can deal with the account-continuity issue in query.c
or in a wrapper thereto, that there are no remaining issues with
reporting.  i.e., for any given report, we are either reporting
data in closed books, or not.  Different reports should have different
defaults.  e.g. income/expense pie chart never looks at old books. 
asset-value-over-time-bar-chart always looks at closed books.


pro: safer than plan F, since we really can enforce the 'you aren't 
     allowed to edit closed books' rule.
pro: solves the old-account/new-account problem, since new accounts 
     can be edited/deleted without damaging old account.
pro: solves the historical reporting problem.

con: queries are potentially slow, loading of file is potentially slow.

But now we have enough info to propose the final solution:

Plan A:
-------
The kvp markup of plan C coupled to the multi-file solution of plan F.
In initial startup of GnuCash, only the 'current' book is loaded.  
If user asks for a report that requires data from old books, then
we have to pause to load one or more of the older books.   

If the books are stored as separate files, then the 'current' book 
needs to somehow know the filenames of the old books.  I recommend
against storing the books as different sections of one file, for 
many reasons:
 % risk of corruption of old books 
 % bloated file size 
 % the single-file solution would need to invent a 'directory' so 
   that the location of the old books in the file can be quickly 
   found and lseek()'ed or mmap()'ed.  But why invent a directory? 
   Unix already provides directories!

I recommend that every book get a unique guid.  The current book
would know the guid's if its closed book progeny.  The filename
would incorporate some compressed version of the guid (and/or
the date of closure).

Optional:
every book gets not only a unique guid, and also stores some 
meta-information (as book-level kvp's):

/book/title=some-user-supplied-name
/book/notes=user-supplied-descriptive-comments
/book/start-date=xxx
/book/end-date=xxx
/book/previous-book-guids=(list 0xa 0xb 0xc)
/book/accounting-period=enum {none, week, month, quarter, trimester, year}

Pro's & Con's
-------------
I am not aware of any con's to plan A at this point.


Implementation Notes:
---------------------
Plan A has been implemented in the engine. 
-- src/engine/Period.[ch]
      Implements the main logic to split one book into two, and populate
      it with the appropriate keys, markup, etc. and to carry balances 
      forward, etc.

   src/engine/gemini
   src/engine/gnc-lot.[ch]

   src/gnome/druid-acct-period.[ch] 
      Implements a druid interface to allow user to specify book closing 
      dates, add a title and notes to a book, and walk through the process.
      Uses FreqSpec.[ch] and the widget in gnc-frequency.[ch] to allow
      the user to specify the frequency of book closings.

-- The Postgres backend has been modified to support multiple books.
   All books are stored in the same database; there is no performance
   penalty for storing all books together in the same SQL database,
   because they can be easily picked apart by an appropriate SQL query.
-- The xml-file backend can store multiple books, but there is currently
   no support for spreading things out across multiple files (for
   faster load, by not loading old books).  

The current implementation of books is broken because it does not
yet make use of 'lots'.  The problem is that for stock accounts (and
other non-currency accounts), it is not enough to supply merely the 
opening balance.  In order to handle depreciation or cap gains properly, 
the dates and quantities of a purchase need to be easily available.  
See "lots.txt" for details.


Open Issues / ToDo
------------------
*) Naming convention for the different books?  When the XML file backend
   is used, different books need to be stored as different files (in order
   to avoid the performance penalty of a large file load).  

*) When saving books, make the book title part of the book name (user
   convenience).

*) Special considerations for scheduled transactions/recurring transactions?

*) Handling of multi-book reports ???  Need to work out the recommended way
   of making this happen....

*) Lots are now implemented in the engine, but not yet used in this code.
   -- ok, we now leave open lots in the new book.
   -- we still need to move closed lots to closed book.
   
*) Need to mark closed book as unalterable, and respect that markup.

*) Need to trimming of price database 

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