Ledgers and sub ledgers are kept open for posting of your financial transactions into sap. However, to avoid incorrect posting to some other periods or months, SAP has given flexibility of opening and closing posting periods by which we can open and close any month for a relevant year based on our business requirements.
You can open as many posting period as you want by using transaction code OB52. But generally, in a business only the current posting period is kept open for a financial year to enter transaction related to that month and all other posting periods are closed.
At the end of the current month, business closes it and opens the next month to record financial transactions into it.
If you want to post a transaction that is related to a particular month which is closed then you can take permission and open that month to enter it in sap. During the quarter or year end closings, you have to open two posting period intervals at the same time. For this reason SAP has allowed to enter two posting periods or months intervals in the posting period table.
At the end of a year, sub ledgers are closed and general ledger accounts kept open in order to have reconciliation between FI and CO.
Example: For the month of January, you can keep “December” month open in addition to the current month “January”. The reason is to enter current transactions related to January month in January and for quarter three closing, you can keep December month open and enter all quarter ending expenses and other financial transactions into it.
For the year end closing, we use to keep open the March month in addition to the special posting period and all adjustments are entered into special posting periods where as March month related transactions are entered into March month.