If defined in a very way simpler way, opening balance can be termed as the amount of money that is found to be in your company’s account during the start of the financial year or period. Learn how to add, enter or edit opening Balance in QuickBooks?
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This entry can be termed as the first entry which is normally done during the company’s start of a new financial year after the end of the previous one.
In QuickBooks, you can add, enter and edit your opening balances and save a lot of time and effort at the same time. This article will help you to have a detailed guide on how to add, enter, or edit opening balance in QuickBooks.
What is the Opening Balance?
Opening balance is basically the amount of money in a company’s account at the beginning of a new financial period or year. This is referred to as the primary entry that’s done when an organization starts its processes or after a year-end. There are multiple steps to edit / enter the opening balance in QuickBooks.
Let’s begin with understanding the concept of opening balance. It is a first amount that is carried forward at the starting of a fiscal year or the accounting period from the previous tenure. It should be treated as the very first entry in your account books. From this point you will start counting all your liabilities, expenses and assets, etc.
Points to Remember:
- Contacting the accounting professional always before entering the opening balance is considered a good option. Press the F1 key or simply click on the link that says- Should I enter an opening balance? While setting up the account. By doing this you can get information about the opening balances.
- In case you do not have a balance prior to the QuickBooks start date then you must not enter the opening balance.
- You may use one or more GJE that you may have created from the Balance Sheet for the prior fiscal year to enter the Opening Balances. This is possible if you start a new company with a date later than the actual one. If you are using journal entries in order to record the opening balances then keep the following points in mind:
- To maintain the balance of the journal entries, use the Opening Balance Equity account as the offset account.
- From the beginning of the year when you enter balances, then you can enter the balance for the previous year’s retained earnings rather than entering expense, cost of goods sold, and each income.
- You can enter only one Account Payable or receivable transactions as per the journal entry. To load the balances for these accounts you need to have multiple journal entries.
- Don’t forget to include the name of the customer or vendor in the names column of journal entries to sales tax payable, accounts receivable, and accounts payable.
- You can choose to adjust both inventory quantity and value by using the Inventory Adjustment screen rather than entering the Inventory Asset Balance through a journal entry.
What is Adding, Entering, or Editing of a Particular Opening Balance in QuickBooks?
At the time of creating a new account in QuickBooks, you would be able to choose a day from when you can henceforth track all of your company’s transactions. With this, you would be further able to insert the balance of your physical bank account of the day which you have chosen.
This is what is termed as the first, beginning point of the opening balance and collates all the transactions which have been recorded so far. Once you have entered the same amount in QuickBooks, you would find that the figures would be matching your bank records from the beginning.
This blog will help you to understand with a step-wise explanation on how to add, enter or edit opening balance in QuickBooks.
How to Add, Enter or Edit Opening Balance in QuickBooks?
Before you heading ahead with understanding how to add, enter or edit a particular opening balance in QuickBooks, here are few important things that you must keep in mind.
- The dates which you would be entering for the timelines from when your company began, are indicative of the time-period from when you wish to start tracking the financial transactions in QuickBooks.
- Once you enter opening balances, the data recorded by the QuickBooks would be terms as Opening balance Equity and ensures you have a nice balance sheet for your business or company.
- At the end of every fiscal year, QuickBooks would be computing the profit or loss data and placed as equity which is known as Retained Earnings.
Steps to Enter Opening Balance in QuickBooks
Step 1: Tap Chart of Accounts located under Company.
Step 2: Press Right-Click and choose New.
Step 3: Select the account type which might be either a credit card or bank account.
Step 4: Insert your respective details by tapping the Add New Account.
Step 5: Select Enter Opening Balance (this option would be available when you haven’t inserted transaction; once inserted it would appear as Change Opening Balance) and hit OK.
Step 6: Finish the process by clicking on Save and Close.
Steps to Follow After Entering Opening Balance in QuickBooks
Step 1: Consider the ending balance fetched from your bank statement and choose to increase the figure with the help of any of the outstanding checks along with decreasing the figures simultaneously with any of the outstanding deposits.
Step 2: Insert the journal entry by debiting the credit or debit card and also include crediting of the opening balance equity.
Step 3: Tap on Make General Journal Entries located under the Company. Assign a date and insert the number of the journal entry.
Step 4: Select your debit or credit card under the Account column and insert the figure that was calculated as per the Debit Column.
Step 5: On the following line, tap on Account and select ‘Opening Balance Equity’ under the drop-down.
Step 6: Insert the amount calculated in the credit column.
Step 7: With the help of Opening Balance Equity, start creating deposits and checks and input all the awaited outstanding transactions.
Doing this, make the reconciliation available irrespective of any associative impact on the balance sheet prior to this. Consider reconciling opening balance journal entries against each account via a mini reconciliation process.
Once you have successfully entered the opening balance in QuickBooks, next you would be needing to edit it too.
Follow the steps that help you to edit the opening balance in QuickBooks, mentioned below:
Steps to Edit Opening Balance in QuickBooks
Step 1: Tap on Chart of Accounts which is located under the Lists.
Step 2: Double-tap the account which you are going to edit.
Step 3: Locate the opening balance transaction from the respective account register.
Step 4: If necessary, you might consider editing the date alongside the amount.
Step 5: Tap Record for saving the changes made.
Enter Other Balance Sheet Accounts
Be careful while entering an opening balance for Equity, other Asset, Fixed Asset, Other Current Liability, and Current Assets as it is possible that you may create a double accounting entry. Both the Accounts Receivable and Accounts payable are considered different in QuickBooks.
1. Using a Journal Entry
- From the Company menu, you have to select Make General Journal Entries.
- Now, for the journal entry set the date and enters the number required.
- Choose the account you want to enter from the Account column.
- You can enter the accounts in the order how you want them to appear on the balance sheet or trial balance.
- Enter the account balance as a positive amount and that too in the right column, depending on the type of account.
- For example:
- For Asset accounts, positive balances will appear in the Debit column.
- For Liability and Equity, in the Credit column, these positive balances appear.
- For each account, you can repeat the 3 and 4 steps.
- Once all the balances have been entered make sure, the total amount in the Credit and Debit column is equal. As the offset to check any difference noticed between the two columns you can use the Opening Balance Equity.
- Then click on Save and then Close.
- Create new journal entries to record the balance for sales tax payable, accounts payable, and receivables. Any other account that is not included in the first journal entry may also be entered.
- Finally, make a journal entry to distribute any remaining balance in the opening balance equity account among the other retained earnings and equity accounts as desired.
2. Through the Chart of Accounts
- From the Company menu click on Chart of Accounts.
- In the Chart of Accounts window, you have to right-click anywhere the window that appeared and then select New.
- Then choose the right Account Type
- After that in the Add New Account screen:
- You have to fill in all details that are needed.
- Then click on Enter Opening Balance button.
- Now enter the amount and the date of the opening balance. You can make use of the day before the QuickBooks start date.
- Then you have to click on OK
- Lastly, click on Save and Close
3. Through the Register
In the account when you have transactions, to enter the opening balance you are required to go to the account register
- From the Company menu click on Chart of Accounts.
- Then you have to choose the account for which you wish to enter the opening balance. From the Edit drop-down list, you have to select Use Register.
- For the new transaction fill in the following fields.
- Opening Balance Date
- Payee: Type Opening Balance
- Number/Type: Leave this section blank
- Account: Choose Opening Balance Equity
- Payment or Deposit: Enter the opening balance in the Deposit field if it is positive and if it is negative then in the Payment Field.
- Click on Record.
4. Income and Expense Accounts
- Since the balance for the income and expense accounts derives from entered transactions such as bills, invoices, and checks, there is no opportunity to enter a balance for these accounts.
Customers and Vendors
1. For Outstanding Balance Before Your Start Date:
Before the start date, if any of your vendors or customer has an outstanding balance, then the following options can be used:
Option 1: Put the outstanding balance with the As of date equal to your start date in the Opening balance field. These opening balance entries will be tracked to expenses or Uncategorized Income. If you are planning to set up jobs for customers, you can enter the opening balance for individual jobs. Additionally, the customer’s name will display the total balance for all jobs. Also, keep in mind that the opening balance field is only available when you add new customers or vendors.
Option 2: Use the opening balance item that you will create a new one and use the same in invoices to create opening balances for vendors and consumers. This will help you choose the account to which entries should be tracked.
Option 3: Instead of providing the overall debt for each of the customers or vendors, enter each individual unpaid bill or invoice. Vendors and customers will both have open balances as a result of all the unpaid transactions. And this will finally lead to opening balances for A/R and A/P. Your vendor and customer opening balances are made up of all the individual sales and bills; using this option will make it easier for you to keep track of them.
2. For Transactions that Occurred After Your Start Date:
If you discover that a customer’s or a vendor’s transactions occurred on or after the start date, you have the choice to enter the relevant individual transactions using the normal QuickBooks forms, which include:
- Bills Payments
- Vendor Bills
- Customer payments and returns
- Sales tax payments
- Vendor Credits
- Invoices and Sales Receipts
How to Create an Opening Balance in QuickBooks?
A small business can use QuickBooks, accounting software to stay track of accounts, payroll and expenses. Before you start using QuickBooks for your accounts, you would like to make a gap balance. lookout when entering this data, because it are often difficult to change the opening balance once the corporate is made. The online opening balance often gets inputted automatically once you download transactions from your bank’s online banking system. If you’d wish to vary the opening balance in QuickBooks online or one of the desktop versions, you’ll do so by accessing the chart of accounts within QuickBooks.
The opening balance has to be correct, otherwise your statements and reports won’t produce precise records. Once you’ve got corrected opening balance in your account, you ought to plan to reconcile your accounts together with your statement to form sure all transactions were processed correctly.
There are various steps involved to make the opening balance in QuickBooks:
- Open the account you would like to enter a gap balance for. In QuickBooks, attend the Lists menu, select “Chart of Accounts” and choose the account you would like to figure on. this may open the new account’s register. If you’re not already, you have got to register for this account, click on “Create New Register.” Name the account.
- Double-check your balance before entering it. Examine the ending balance for the financial year or civil year and deduct any outstanding checks.
- Enter the beginning of your calendar or financial year . The default during this field is today’s date. this may got to be changed to the date of the start of the calendar or financial year for your company.
- Leave the “Number” and “Payee” fields blank and scroll right down to the sector for “Opening Account Balance.“
- Enter the opening account balance. Double-check your entry. If this opening balance is for a checking account , place this entry within the “Deposit” field. For equity accounts type, you should use the “Increase” field.
- Highlight the “Account Type” field to open a menu . Select “Opening Balance Equity” from the menu .
- Click the “Record” button. this may finalize your entry and make a replacement opening balance for your account.
How to Change Opening Balance in QuickBooks Desktop & Online?
By this time, you also must have become familiar with QuickBooks brand name. This specific QuickBooks accounting software is mainly being used by many business owners for accounting and other financial purposes. It is available in various versions such as QuickBooks online or QuickBooks Desktop and so on. Each version adds something new to the table and all you need to do is to explore it more and more. It mostly will lead you through the prompts and you will know exactly what you are doing even if you are a newbie.
How to Change Opening Balance in QuickBooks Online
Being based on simple calculations, at some point, anyone is bound to make a mistake. And, accounting figures are usually huge and need extra attention to it. Though an expert accountant will not be making such mistakes very often, human errors are still a possibility that cannot be ruled out. And, not necessarily, everyone can go for a professional accountant who will not make a mistake which is again not guaranteed.
There will be times, you may enter the wrong amount of the opening balance in QuickBooks Online which will surely change the calculations. Due to this specific issue, you may face a big calculation error while working with your bank account in the QuickBooks account. However, you do not need to worry at all for this as you can easily edit the opening balance by following these steps mentioned as below:
- First of all, Login to your QuickBooks online account.
- You need to select the Settings and choose the Chart of Accounts.
- After this, please look for the specific account and choose the action tab.
- Then, you need to choose the Account history of the chosen account.
- Locate the opening balance entry and select it to edit.
- The selected balance will give you the option to re-enter the amount. You need to enter the correct amount by choosing the Edit option.
- Click on Save to save the recent done changes.
- Finally, you need to check whether the opening balance has been updated or not.
How to Change Opening Balance in QuickBooks Desktop
- Below are the steps mentioned for QuickBooks Pro, Premier, and Enterprise.
- First, open QuickBooks and then go to the Lists menu, and then there look for the Chart of Accounts.
- Then select the account with the inaccurate opening balance and then choose Edit and Use Register.
- After that place the opening balance transaction. Essentially, this transaction is the first transaction in the account area and with the label of Opening Balance.
If there is no opening balance, a new transaction must be created, and the day before the first transaction must be changed.
- Insert the opening balance and select “Record” in the Opening Balance field.
How to Edit Opening Balance in QuickBooks?
Income or Expense Accounts
- Chart of Accounts can be chosen from the Lists Menu.
- To edit an income or expense, double-click on it.
- In the Account Quick Report, change the date to reflect your start date. You can select ALL from the Dates drop-down menu if you are unsure about the exact start date.
- The correct transactions, which are usually among the initial transactions, can then be found by searching the report.
- You can QuickZoom a transaction by moving the mouse pointer over it. Double-click the magnifying glass when it displays.
- Then make all required changes. If the adjustments made have an impact on the journal entry, then the general journal entry transaction requires that the total debits and total credits be equal.
- Next, click on OK
In conclusion, these above mentioned steps will ensure that in case there has been a mistake in entering the opening balance then these steps will assist you to correct it. QuickBooks software has been proved to be fruitful to all the big and small organizations. Sometimes, QuickBooks users who do not have in-depth finance knowledge, may end up entering the wrong entry for the opening balance. This issue can lead to a big issue for the business. Moreover, all we know is an opening balance is brought forward to the next accounting year while starting any firm. This amount should be correct. With the help of these steps will enable you to retrace your steps and make it error free.
Although, everything in theory seems very easy and can be different when practically done. But do not worry, we will do everything possible to support you. Our expert professionals are just a few clicks away. You can avail the support any time you want at your convenience.
Easy enough? Explaining the process associated with how to add, enter or edit a particular opening balance in QuickBooks, hope this article has made justice to your respective concerns and queries.
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Frequently Asked Questions (Faqs)
What is a Balance Sheet in Accounting?
It is a financial statement that reports liabilities, company assets, and shareholder equity. With the help of these three core financial statements that are used to estimate a business. A snapshot of a company’s finances such as what it owns and owes as the date of publication is all mentioned in the balance sheet.
Do You Need to Pay the Outstanding Balance?
To improve your savings and credit score, pay off the balance due each month. Specific credit limits (spending limits) are placed on your cards by the companies that assign credit cards. Your available credit (amount of money left over for purchases) is partially determined by the balance on your credit card.
How to Correct an Opening Balance in QuickBooks?
● Firstly, go to the settings and then choose Chart of Accounts.
● Then locate the account and then you have to go to the Action column and then you have to choose Account history.
● After that, you have to search the opening balance entry.
● Choose the opening balance entry and then edit the amount.
● Lastly, you have to select Save.
What is the Way to Edit the Opening Balance?
Bank MasterCard and other balance sheets accounts: Choose the chart of accounts from the list menu -> Double click on the account you would like to edit -> Then, find the opening balance transaction in h account register (usually the primary one) and it’ll even have the opening balance equity in account field -> If required, also edit the date also because the amount -> Click on the records to save lots of the changes you’ve got done.
Income or expense accounts: Select the charts of accounts from the list menu -> Double click on the income or expense that you simply wish to edit -> choose the date to your start date within the accounting report. If you don’t know the precise start date, then, you’ll choose to beat the dates sink -> within the next step, you’ll search the report for the right transactions that are usually among the primary transactions -> Leave the mouse pointer over a transaction and quickly zoom it. As soon the hand glass appears , double click thereon -> Do all the specified changes -> If changes done affect journal entry then journal entry transactions require total debit and total credit -> click ok -> the required changes are done.
How can We Edit the Opening Balance?
Below is the procedure to edit the opening balance, the important thing we need to know is that the changing of opening balance is not the same as the editing process of the opening balance.
Under the bank, credit card and other balance sheets accounts we need to follow the below mentioned steps while editing the opening balance:
Firstly, choose the charts of accounts from the list menu -> double click on the account you wish to modify -> find the opening balance transaction in the account register. This transaction is usually the first one. It will also have opening balance equity in the accounting field. -> If necessary, also edit the date as well as the amount. Click on the save button to save lots of the changes you’ve got done.
What if Someone Forgot to Enter the Opening Balance in the Start When You Created the Company?
If something happened like this then, there is a way to fix this by creating a journal entry to record the opening balance. Like in the given screenshot, you need to enter the Journal date, Journal number and tick the adjusting journal entry tab. Then, make the entry as mentioned in screenshot number 2. If the opening balance is in negative figure you can put the amount on the credit side.
How do You Record a Company Error in a Bank Reconciliation?
In case you have found the errors being made, then, you need to ensure that those recorded errors should be either added or subtracted from the record book of balance. If any particular item is cleared by the bank for lesser amount value in the books, you need to add the amount of the error. If any item cleared the bank for a bigger value than the amount in the books, then you should subtract the amount of the error.
How to Check the Bank Balance in QuickBooks?
QuickBooks online account will give you quick access to your bank and its finance details. Here are the listed steps through which you can check the bank balance in QuickBooks:
Login to the QuickBooks account.
Click on the Gear icon at the right top.
Choose the Chart of Accounts tab visible under Your Company name.
You need to look up the specific account, then you need to open the Account history under the Action tab.
Search the opening balance, now you can choose it to either delete or edit.
If you choose to edit it, it is recommended to ensure that you enter a zero amount as well to fix the opening balance.
Select Save and close.
How do You Fix Reconciliation Discrepancies in QuickBooks online?
In case, you see the discrepancy in QuickBooks online account and your bank statement, please refer to these following steps:
Login to the QuickBooks account.
You need to run a Reconciliation Discrepancy report.
Click on the Reports menu and hover your mouse over Banking tab.
Choose the Reconciliation Discrepancy action.
Choose the specific bank account you’re reconciling and then click on the OK button.
Finally, review the report and look up for any discrepancies.
What Transactions would I be able to enter with respect to transactional Data of Customers or Vendors in QuickBooks?
Here are a few of the transactions that you would be able to enter with respect to transactional data of customers or vendors in QuickBooks:
Sales tax payments
Invoices and Sales Receipts
Customer payments and returns
Can I Enter Income and Expense Accounts in QuickBooks?
No. On QuickBooks, you would not be able to insert balance for income and expense accounts since the balance of these accounts belongs to types of transactions that are entered as invoices, bills, and checks.
What is the Way to Change the Opening Balance in QuickBooks?
The online opening balance often gets inputted automatically once you download transactions from your bank’s online banking system. If you’d wish to vary the opening balance in QuickBooks online or one of the desktop versions, you’ll do so by accessing the chart of accounts within QuickBooks. The opening balance must be correct, otherwise your statement and report won’t produce accurate records. Once you’ve corrected the opening balance in your account, you ought to plan to reconcile your accounts together with your statement to make sure all transactions were processed correctly.