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E
engrProf
July 2, 2024
Question

Linking a Schwab Account

  • July 2, 2024
  • 1 reply
  • 0 views

I am the treasurer of a nonprofit organization.I am keeping the books in Quickbooks Online. I recently opened an account with Charles Schwab and purchased some treasury bills. I linked my Quickbooks Online account with my Schwab account. It brought over all my transactions, but did something I do not understand. It took the market value of my T-bills on the date I linked the accounts, and placed it in an Equity account called "Opening Balance Equity." This entry was dated the day before my initial deposit to the Schwab account, which was more than a week before I purchased the T-bills, and more than a month before I connected the accounts. I can make the Schwab account match yesterday's value if I categorize the T-bill purchases in an expense account. But when I update the connection, the "opening balance equity" doesn't update, and so now the amounts don't match in my Schwab and my Quickbooks account.

 

This seems completely wrong to me. I don't have any interest in day-to-day tracking of the "equity" in my T-bill accounts. I'm going to hold them to maturity, cash them in, and buy new ones.

 

How do I fix this? What do I do with this "opening balance equity" account?

1 reply

A
AileneA
July 2, 2024

I'll help you match your opening balance from your Schwab and Quickbooks account, engrProf.

 

The Opening Balance Equity account is created automatically by QuickBooks Online when you enter opening balances for your accounts during the setup process. This is the balance of your real-life bank account for whatever day you choose to start tracking transactions.

 

Let's review all transactions in the Opening Balance Equity account to ensure they are accurate and correctly categorized. It's important to understand that the Opening Balance Equity account should ideally have a zero balance once the setup process is complete.

 

If you find any transactions in the Opening Balance Equity account that are incorrect or need adjustment, you will need to move them to the appropriate accounts. To do this, you can create a Journal entry to transfer the amount from the Opening Balance Equity account to the correct account.

 

To create a Journal entry, here's how: 

 

  1. Select the + New button.
  2. Click Journal entry.
  3. On the first line, select an account from the Account field. Depending on if you need to debit or credit the account, enter the amount in the correct column.
  4. On the next line, select the other account you're moving money to or from. Depending on if you entered a debit or credit on the first line, enter the same amount in the opposite column.
  5. Check the amounts, you should have the same amount in the Credit column on one line and the Debit column on the other. This means the accounts are in balance.
  6. Enter information in the memo section if needed.
  7. Hit Save and close.

 

 

 

 

However, if you are unsure about how to handle the Opening Balance Equity account or if you need assistance in making adjustments, I recommend consulting with an accountant to guide you through the process. If you don't have an accountant, we can help you find one. Feel free to visit this page to find an accountant for your business: Find a QuickBooks ProAdvisor.

 

I'll leave some articles to help you further with the process:

 

 

Moreover, I'll add these articles that tackle year-end guide and closing books in QBO for more information:

 

 

If I can be of any additional assistance, please don't hesitate to leave a comment below. Have a great rest of the day.

E
engrProfAuthor
July 5, 2024

Thank you very much for taking the time to reply to my question. However, this does not seem like the right approach to me. 

  • You say the opening balance equity is  "the balance of your real-life bank account for whatever day you choose to start tracking transactions." But that is not what Quickbooks did. The "opening balance equity" entry was dated the day I opened the account. On that date the balance of the account was zero, but the amount of the "opening balance equity" entry was the market value of my T-bills on the date I first connected the account to Quickbooks. 
  • This "opening balance equity" amount does not adjust when I update the connection. It remains at the market value of the T-bills on the date I connected the account to Quickbooks.
  • This is clearly wrong. The date is wrong; the amount of "opening value equity" no longer matches anything about my Schwab account because the market value of my T-bills has changed; and the balance in the account is incorrect.

I chose to address the problem by editing the amount of the opening balance equity to zero, which was the actual value of the account on the date I opened it. I recorded the T-bill purchase transactions as transfers to a new "other current assets" account I created for T-bills. I think this will work for my purposes. I am using Quickbooks to track my T-bill purchases and any interest earned. I have no need to track the day-to-day market value of my T-bills. Therefore this seems to be the appropriate solution. 

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