QuickBooks Desktop software is accounting software that helps you manage the books and accounts of a particular organisation. The software has always been on top in there financial market. The software has only one major problem, and that is the software being prone to errors and issues. The Opening Balance Equity Account is one other thing that comes along with many other common errors.
In this blog, you will get to know more about the Opening Balance Equity Account, so please read the whole blog till the very end, and it will surely help you in some way or the other so do read the entire blog very carefully.
Opening Balance Equity Account
QuickBooks automatically reports the following transactions on the Opening Balance Equity account:
- When a new bank account is established in the EasyStep Interview, the concluding bank statement balance transaction.
- Open the balances generated in the Add New Account dialogue for other Balance Sheet accounts.
- When new clients or vendors are set up, opening balances are entered.
- Complete value balances of the inventory entered in the New Item dialogue.
- Bank reconciliation changes for the 2005 or earlier versions of QuickBooks.
Other regular transactions that could be allocated to this account by a user include:
- Accrual basis for opening accounts for payable transactions as of the date of commencement.
- Accrual basis for opening receivable transactions from accounts as of the start date.
- Uncleared bank checks or deposits as of the starting date (accrual or cash basis).
Some of the common errors that you might face are as follows:
- Users do not know what to do with the account for Open Balance Equity.
- When setting up a new account, vendor, customer or inventory object, users enter the opening balance.
- Users make transactions that are posted to an account with Open Balance Equity.
The Symptoms of these Common Errors
- Balance persists in the Open Balance Equity account long after the data file was initially released.
- There’s a balance in the Open Balance Equity account.
Open Balance Equity Account Checking Balances
A summary of the transactions is first produced to review transactions in the Opening Balance Equity account. To generate a transaction report for the Opening Balance Equity account:
- Click Reports > Business & Financial, then pick the Regular report for the balance sheet.
- View the Equity portion of the report without changing the date to see if a balance remains in the account.
- In the View tab, in the Columns section, click to place a checkmark next to the data fields that are to be included in the report. Or click to delete the checkmark from those that are not to be contained in the report. Make sure the form is included near the top of the list.
- Click the tab for Filters.
- Select Account in the Select Filter pane; from the Account drop-down menu, select Open Balance Account.
Opening Balance Equity Closing to Remaining Earnings
Once a file is set up correctly, the Opening Balance Equity account should have a zero balance. A QuickBooks file adequately set up assumes the following:
- You do not convert data from Quicken, Peachtree, Microsoft Small Business Accounting or Office Accounting. Each item has an Intuit-free automatic conversion tool that removes the need to make start-up transactions if the information is corrected and not just lists.
- Before the QuickBooks start date, the company had transactions (i.e., it is not a new business). If it is a new company without previous transactions, simply begin to join traditional QuickBooks.
- Optionally, pick Form for the drop-down list of Sort By. This alternative groups the report by transaction form, making it easier to review the transactions’ source.
- Transactions with no unusual start-up entries needed.
- If transactions were entered before QuickBooks and each of the unpaid customer invoices, unpaid vendor bills and outstanding bank transactions were entered and dated before the start date of QuickBooks.
- One day before the QuickBooks start date, the trial balance was entered. (i.e., the trial balance is dated 12/31 of the preceding year if the fiscal year begins 1/1).
If the above stipulations are correct, then it is assumed that the Opening Balance Equity from the accountant’s financials or the previous software would exceed the Retained Earnings balance. Continue to analyse the data to find the errors if it does not agree. It makes the final entry close the balance in Opening Balance Equity to Retained Earnings in the startup phase if it settles.
In conclusion, QuickBooks Desktop software helps you manage the books and accounts of a particular organisation. The software is prone to errors and issues, and this blog will allow you to fix one of them. This blog’s whole idea is to help you understand the opening balance equity account and some other common errors, solutions, and other important aspects related to the same. I hope that this blog helps you fix this particular issue and worth your time.
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