The Opening Balances in QuickBooks relate to the Balance Sheet accounts. If you are starting somewhere in your fiscal year, say after the first quarter, then you will have to input those figures for all the accounts using a General Journal entry.
I will first deal with using the account setup and opening balance features before addressing the journal entry.
Bank Account – Now you may have set this up already in the EasyStep Interview but if you did not have all the statements, or were in a rush and skipped that step, I am going to go over it with you. If you are creating an opening balance for a new fiscal year then you should use the accountant’s Balance Sheet figures. If you do not have this, then grab your bank statement.
All your accounts that were set up either by you or QuickBooks will have a zero balance in them until you enter figures or data into them. So let’s start with the bank account.
Go to your Home page and the module that is next to Vendors to your right is the Company with the Chart of Accounts in it. Clicking on the Chart of Accounts will open the window where you will see the account list. On it you may see several types of accounts such as Asset, Liabilities, Income or Expense.
If you do not see a bank account you will need to add one. If you did set one up then you may need to edit it if there is no balance in it.
Right click on your mouse will open a window from which you can then select New or Edit, depending on whether you have set up the account. I will lead you through the setup for a new account since the second screen is essentially the same in New, as the first screen in Edit.
Choosing New will open a screen where you need to choose the account type, which will be Bank. The Continue tab will then take you to the Add New Account screen. Working your way down from the top, fill in all the fields except for Tax-Line Mapping and the reminder to order cheques, unless of course you have laser cheques already.
Clicking on the Enter Opening Balance tab will direct you to a page where you will use the figure from your previous bank statement. The start date of your company’s operations will determine which month’s bank statement you will use. If you are setting the bank account up in the middle of the year, then take the last reconciled bank balance.
Don’t forget that this is the ending bank balance from the previous month.
Say OK and then click on Save and Close. You may get a message about online banking services, which I will cover in another article, but for now click on No. This will take you back to a screen on which you will see the newly created bank account along with its balance.
You will not have to create an Accounts Payable or Receivable because QuickBooks will create this for you when you add the first vendor (A/P) and customer (A/R).
Journal Entry for Opening Balances – this method would be used when creating your company file during your fiscal year, say the first quarter. Make sure that you are working with the prior month’s closing Balance Sheet figures!
Go to your Home page and above it at the very top you will see the menu bar which starts with File on the far left. Scan your eyes to the right until you find Company.
Click on that and it will open a list, and near the bottom of that list you will find Make General Journal Entries. Choosing that will take you to the journal entry page. The date that you enter should be the ending of the previous month, then tab once to the Entry No. and type in Opening Balances.
Make sure the Adjusting Entry box has a check mark in it. Only check this box when making adjusting entries, otherwise leave it unchecked. The next tab will take you to the Account field.
Click on the drop down arrow and select the account that corresponds with the prior month’s Balance Sheet account. If you have not set it up in QuickBooks, then follow the steps I described above to add it your Chart of Accounts.
Instead of clicking on the down arrow button you can start to type the name of the account in the blank field and if you have set the account up already, it will fill in the name for you. Tab to the Debit or Credit field and enter in the amount, then tab to the Memo field. In it type Opening Balances, then tab until you get back to the Account field again.
Repeat these instructions until you have entered all the account balances. Your check on this entry will be if the Totals field balances. If it does not, then QuickBooks will not allow you to Save and Close (post it).
If the journal entry had some complicated accounts and you cannot figure it out, then it’s time to call your QuickBooks Trainer or your ProAdvisor.
Next I will take you through List, Customer and Vendor setup in this QuickBooks training.
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