Can I match bills which were entered two years back with the advance payment, which was made three years back? Will it affect closed financial statements?

Modifying historical financial data from past closed years can cause discrepancies in your books, Vaitheky.

In QuickBooks, altering records from previously reconciled periods can compromise the credibility and accuracy of the data. You'll have to undo all reconciliations to match the transactions and ensure balances from these accounting periods are reviewed.

With this, it's best to consult with your accountant to provide detailed disclosures of the impacts of any changes made and guide you when making adjustments to your books.

Thus, you can share this reference with your accounting advisor to help you modify several transactions on a past reconciliation: Undo a client’s reconciliation in QuickBooks Online Accountant.

Feel free to get back to us for any additional queries.

@Vaitheky-Vishnukanthan 

Do you see the corresponding credits created by the prepayments available to pay the bills?  If so, you can apply the credits to the bills and it shouldn't affect previous bank reconciliations or your financial statements.