What Is An Opening Balance?

Record Opening Balance

The Opening balance is the amount of balance available in your company’s account at the beginning of the new financial year. It is the first entry in the company’s account, either when they are first starting up or during the start of a new financial year. You can find the opening balance on the credit or debit side of the ledger, depending on whether or not the company has a positive or negative balance.

Note:

  • It is best to take advice from yours accountants before you enter an opening balance. You can open the Product Information Window by pressing F1 key or click on Should I enter an opening balance? Option during the process of setting up account, customer or vendor in QuickBooks to gather information regarding the opening balances.
  • If there is no opening balance prior to the QuickBooks Start Date, you don’t need to enter an opening balance. In place of adding opening balance, you can make transactions such as Deposit for bank or funds transfer for equity accounts for adding money to the account. You can take opinion from your accountant if you have any kind of doubt.
  • If you created new company file with a start date later than the actual company then need to enter an Opening Balances through one or more GJE that make using the Balance Sheet for the last fiscal year. If you use journal entries to record opening balances then you need to keep the following points in your mind:
    • Open Balance Equity2 needs to be considered as the offset account to maintain the balance in the journal entries.
    • If you record balances for the beginning of the year it may be enough to enter a balance for last year’s retained earnings3 rather than for each income, expense and cost of goods sold (COGS) account.
    • You can enter single accounts receivable or accounts payable transaction per entry so you are required to create more than one journal entries to load the balances for such accounts.
    • You must add a vendor or customer name under the Name section of journal entries to accounts payable, accounts receivable, and sales tax payable.
    • You can use the Inventory Adjustment screen in place of entering the Inventory Asset balance through a journal entry to maintain both inventory value and quantity.

Enter Opening Balance

Bank or credit card accounts

  • Open QuickBooks and go to Company > Chart of Accounts
  • Right click on the window and select New from the drop-down list
  • In the account type, select Bank or Credit Card
  • Under the Add New Account screen:
    • Fill out all the required fields.
    • Click on the Enter Opening Balance The Enter Opening Balance will be available if you haven’t entered any transaction till now and when you enter the transactions it’ll change to the Change Opening Balance option.
    • Provide the Ending Balance & Ending Date from the last bank or credit card statement that you’ve received before your QuickBooks Start Date
    • Click on OK
  • Click on Save & Close

If you have outstanding transactions in the bank or credit card, you should account for them for accurate upcoming future. Once you are done with entering your opening balances, follow the below mentioned steps:

  • Take the ending balance from the previous bank statement and:
    • You need to increase the amount be any outstanding checks.
    • Reduce the amount by any outstanding deposits.
  • Provide a journal entry that debts the bank or credit card account and crediting opening balance equity.
    • Go to Company > Make General Journal Entries
    • Provide a date and enter a number for the journal entry.
    • Under the Account column, select the bank account or credit card account and in the Debit section, enter the amount calculated in the 2nd
    • Now, click on Account and select Opening Balance Equity from the drop-down list.
    • In the Credit section, enter the amount calculated in the 2nd
  • Type in the outstanding transactions by creating checks or deposits through the Opening Balance Equity as the expense/income account.
  • Reconcile the opening balance journal entry for every account using the mini reconciliation process.

Other balance sheet accounts

Be carefully while entering an opening balance for a fixed asset, equity, long term liability, other asset, other current liability account because you can mistakenly create a double accounting entry. Also, QuickBooks treats differently Accounts Receivable and Accounts Payable opening balances.

Through the Chart of Accounts

  • Go to the Company menu and click on Chart of Accounts.
  • Right click in the Chart of Accounts window and select
  • Select the appropriate Account Type.
  • In the Add New Account screen:
    • Provide information in the appropriate fields.
    • Click on the Enter Opening Balance
    • Enter the opening balance amount and the date. Enter the date before your QuickBooks start date.
    • Click on Ok.
  • Click on Save & Close.

Using a journal entry

  • Go to the Company menu and then select Make General Journal Entries.
  • Enter the date and a number for the journal entry.
  • From the Account column, choose or create the account to be entered. You may wish to enter the accounts in the order in which they appear on the balance sheet or trial balance.
  • Enter the account balance as a positive amount in the required section. The balance depends on the type of account.
  • Repeat steps 3 and 4 for each account.
  • Once you enter all the balances, make sure that the Debit and Credit sections are equal. Utilize the Opening Balance Equity account as the offset for any difference between both the sections.
  • Click on Save & Close.
  • Make substitute journal entries or other transactions for entering the balances for accounts receivable, accounts payable, sales tax payable or any other account not included on the first journal entry.
  • Make a final journal entry to allocate all the remaining balances under the opening balance equity account among other equity accounts and retained earnings as appropriate.

Through the Register

If transactions are already in the account then you have to go to the account register in order to enter the opening balance.

  • Go to the Company menu and click on Chart of Accounts.
  • Click on the account for which you wish you provide an opening balance.
  • Now, click on Edit and select Use Register
  • Complete the fields for the new transaction as follows:
    • Date: Opening balance date.
    • Number/Type: Leave this field blank.
    • Account: Select Opening Bal Equity.
    • Payment or Deposit: Provide the amount of the opening balance under the Deposit field if it is positive and Payment field if it is negative.
  • Select Record.

Customers and vendors (A/R and A/P)

For outstanding balance before your start date: If the customer or vendor has outstanding balance BEFORE your start date, use any of the following options to record the balance.

  • Option 1: In the Opening balance field, enter the outstanding balance as of date equal to your start date. If you are looking setup jobs for customers, enter opening balances for the individual jobs instead. The customer name will display the entire balance for all its jobs. Make sure that the opening balance field is available only after adding new customers/vendors.
  • Option 2: To create opening balances for customers and vendors, create an Opening Balance item and utilize it in invoices and bills. This option will help you in determining the account that you the entries to track to.
  • Option 3: Enter single invoice or bills that are not paid in place of a total balance for all customer and vendor. The unpaid transactions will result in open balances for customers and vendors, and those balances will collectively result in A/R and A/P opening balances. This option is particularly helpful if you need to keep track of individual sales or bills that make up your customer and vendor opening balances.

For transactions that occurred after your start date: If the customer or vendor transactions shows up on or AFTER the start date, you can use standard QuickBooks forms to enter the correct transactions such as:

  • Invoices and sales receipts (with sales tax, if appropriate)
  • Customer returns
  • Customer payments
  • Deposits
  • Sales tax payments
  • Vendor bills
  • Vendor credits
  • Bill payments

Follow The Steps Carefully or Contact Our ProAdvisors

Technical Support For QuickBooks Software

The above mentioned steps will help you in Record Opening Balance in QuickBooks software. It is a bit complicated process and sometimes you may face some difficulties during the process. In such scenarios, you can get in touch with our technical support department through the QuickBooks Tech Support Phone Number +1800-386-0425 toll-free.

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Record Opening Balance

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