I recorded an amount to bank corresponding to the closing balance of 2009, we started using QB in 2010 and I am planning to record all transaction from January (2010) but I don't understand why QB record that opening balance in Balance Equity. Help me!
The Opening Balance Equity account is simply there for people who are entering information for the first time. It gives you an account to offset everything against and when everything is entered, it should equal 0. If it doesn't, then there is an error somewhere.
I guess the reason is that when you set up your new accounts (especially assets and liabilities) you just go to the chart of accounts and edit the new account and just enter the total in the field provided. As a result, QB automatically offsets your amount to Opening Balance Equity and you need to offset all the rest so that everything balances correctly.
Quickbooks created this opening balance in equity as soon as you entered the opening balance in the bank, because your bank is a balance sheet account. As you enter all the transactions from January on, your balance in the equity account will also be updated. Once you have entered all your opening balances, transactions, assets and liabilities, your balance sheet will be accurate. I hope this helps.
I did this procedure when I first entering the opening balances in QB2009. I did adjust the opening balances of the PST and GST to Balance Equity because what I got from the help menu...In QB 2010 there was this unassigned amount ...and this was the opening balance I recorded to the Balance Equity when I started in QB2009. That's why I am so confused....why this QB2010 makes so complicated....I rather stayed using Simply Accounting.
Thank you all for the comments.
Hi smart856, I did understand that the account opening balance equity records is originated for a double entry transaction when we record opening balance amount in an account (e.g. bank), If we start using QB from January we should record opening balances to every account using the balance sheet from previous year (using different software or method), so when we enter all opening balances in QB the account opening balance equity should be 0.
"QB automatically offsets your amount to Opening Balance Equity and you need to offset all the rest so that everything balances correctly"
Hope this help you!
It just happened our Beginning Year is in Aug. our year end is July 31...the help menu tells me if your beginning in somewhere in the middle of the year that amount adjusted to Equity Balance.
