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oscortega
October 14, 2018
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Opening balance equity

  • October 14, 2018
  • 4 replies
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How can I establish my opening balance after the bank information has been imported? 

As an example, My actual opening balance was $100.  But The info imported from the bank states as a MEMO that a transaction of $384.53 is my "Opening Balance from Bank".  How can I remove this association and choose the correct transaction as the opening balance?

 

Thnx

    Best answer by lynda11_2

    Hello @oscortega:

     

    This is one of my pet "peeves" when you hook up a bank feed initially.  It goes back 90 days and then it enters whatever the balance is at that time AND it reconciles that transaction (causing a whole other issue).  Here is a post I wrote on logging in and connecting the bank for the first time.  And the steps you need to follow to remove that unwanted reconciled opening balance transaction.

     

    I hope that helps you.   If you need more help, feel free to reach out.  Happy Sunday!

     

    Lynda

    4 replies

    lynda11_2
    lynda11_2Answer
    October 14, 2018

    Hello @oscortega:

     

    This is one of my pet "peeves" when you hook up a bank feed initially.  It goes back 90 days and then it enters whatever the balance is at that time AND it reconciles that transaction (causing a whole other issue).  Here is a post I wrote on logging in and connecting the bank for the first time.  And the steps you need to follow to remove that unwanted reconciled opening balance transaction.

     

    I hope that helps you.   If you need more help, feel free to reach out.  Happy Sunday!

     

    Lynda

      O
      oscortegaAuthor
      October 15, 2018

      Hi Lynda,

       

      Thank you so much for sending me the link to your video.  I did watch and it was very clear.  I simply deleted the opening balance that QBO created.  I now have as you did in the video a balance of zero when I go to reconcile.

       

      My question now is maybe a silly one.  I opened the bank account with $100.  I was assuming (before watching your video) that this was my opening balance.  But yoyr video made it claer to me that an opening balance is obviously a zero balance.  The first transaction of course is just that...a first transaction.  AM I correct?  That minimum $100. dollar deposit used to establish a bank account is not an opening balance.   It is simply the first transaction recorded?

        lynda11_2
        lynda11_2
        October 15, 2018

        @oscortega:  Not a silly question at all. Yes, the $100 would be your first transaction.  The opening balance should be zero the first time you reconcile.  Code the $100 from wherever those funds came from.  IE, another bank account in your business, you personally (code to your equity account), etc.  Typically it is one of those two places mentioned.  

         

        Lynda

          V
          Vitan
          October 25, 2018

          I have a question for opening balance on accounts- is it possible to just have the starting balance on an account without having to affiliate it with another account? And  are opening balances really equity? Doesn't equity mean the worth of your business? So if you started quick books with negative worth then your business will always have negative worth? I just don't think the starting balance (at the time you started quickbooks) is a good representation of your companies worth. Is there another account you can use for starting balance instead of Open Balance Equity? Because I know Open Balance Equity shows up on the Balance Sheet and I can't figure out how to zero out that negative amount from OBE. Even if I transfer it to another account then another account will be negative. How can I make it so that the OPENING BALANCES of my accounts don't show up on the Balance Sheet Report?

          MichaelDL
          MichaelDL
          October 25, 2018

          Greetings, @Vitan.

           

          I'll be happy to provide some clarification on this Opening Balance Equity issue. Rather than the worth of your business, Equity is more aptly defined as an individual's worth in the business. This is also often referred to as Capital. For example, if an individual invests $20,000 in the company but also brings in a $10,000 liability, their initial Capital is $10,000 (investment minus liability).

           

          Is it possible to create an opening balance without affiliating it with another account?

          QuickBooks Online uses double-entry accounting, so this initial capital is necessary for recording the Opening Balance of new accounts. Generally this only occurs when a new set of books is opened, as any accounts created thereafter can have both ends originate from within the business. For instance, a new bank account can have its beginning balance fed by transferring from an existing account or a loan will contribute its asset and liability simultaneously.

           

          How does this represent my business's worth?

          Remember that the Balance Sheet doesn't necessarily represent the wellness of your business, rather it proves that every balance has an origin and is equally and oppositely represented elsewhere in the records. Statements like the Profit and Loss that report income are more adequate for determining your company's success for a given period. Once your decided accounting period has ended and the books are closed, your Net Profit/Loss will flow into Retained Earnings and help balance your Owner's Equity. This way, even if you begin a period with negative equity, it will be increased if the business is doing well.

           

          Much of this information is explained in detail in these resources and I strongly encourage you to check them out:

           

          I also recommend getting in touch with an accounting professional for a personalized opinion. Every business is unique and they can make suggestions for handling those Opening Balances that are a perfect fit for your company. Look into the Intuit Find-A-ProAdvisor site to find certified professionals in your local area that are sure to have the answers you're looking for.

           

          With this information, you'll be an Equity master before you know it. Please know I'm always available here for all of your questions and concerns. Thanks for reaching out, wishing you continued success.

            J
            Jhanse121
            October 2, 2020

            We have been using QBO since 2019. However, this year, two journal entries have been inexplicably added to our Opening Balance Equity account. One is an increase from April, and the other is a decrease from July. What could have caused this, and how do I fix it? It's not like its from when we first added the bank account in 2019.

            C
            Catherine_B
            October 2, 2020

            Hello there, Jhanse121.

             

            We can look into the transaction journal of your Journal Entries to help us identify why there's a decrease and increase. Let me show you how:

             

            1. Go to the Accounting menu and select Chart of Accounts.
            2. Look for the bank and click View register.
            3. Locate the Journal Entry and select it. Then, click Edit.
            4. At the bottom menu, click More and then Transaction journal. 

            If you're unsure how to manage your journal entries, you can get in touch with an accountant to help you handle it. 

             

            Here are a few references that you can check out:

            I'm just around if there's anything else that you need help with. You take care and have a great day!

            JessT
            JessT
            June 18, 2021

            Hello Boknows609,

             

            I'm glad that you found my colleague's answer super helpful. Let me continue to help you with your initial deposit.

             

            You won't need to connect your personal account since it's not part of your business. Simply record the initial deposit as a deposit since it's a money-in transaction. Then, you can categorize it as capital or owner's equity. You can ask an accountant how to properly categorize it.

             

            Please don't forget to mark your first transaction as reconciled (mark it with R).

             

            Let me know if you have other questions in mind.

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