It is mandatory for all small businesses to properly maintain the opening entries in their books for better accounting purposes so is the case with QuickBooks Accounting. If you operate your account yourself or you are taking the help of a freelancer, you need to ensure that the entries that are made in the opening of any financial year in the QuickBooks accounting software are accurate and correct as it becomes difficult for you to identify the errors and get them corrected at the later stage.
What are opening entries or opening balances?
The entries that are made in QuickBooks accounts at the beginning of any financial year are known as Opening entries or Opening Balances. After the closure of the last financial year, the first entry that is made in the new financial year in the company’s accounts is called the opening entry.
Let us understand some important points that need to keep in mind at the time of making opening entries.
- The date when you start your company file is to be recorded correctly so as to track the financial transactions in QuickBooks Accounts.
- The undistributed profits of the last fiscal year which was not shared earlier among the shareholders or owners of the company are computed by QuickBooks in the equity account named Retained Earnings.
- When you enter the opening balance in the Balance sheet that was created by QuickBooks, the same amount is being entered by QuickBooks in the company’s equity account. Hence whatever assets and liabilities you enter in the Balance sheet should get auto-matched with the balance sheet created by QuickBooks.
- You need to take consultation from a professional accountant in order to make any opening entries while you set QuickBooks Accounts for the new financial year.
- In case there is no closing balance of the last fiscal year then there is no need to make an opening entry in the QuickBooks account.
- More than one journal entry can be created from the balance sheet of the previous fiscal year. Here are some tips that you need to keep in mind while using journal entries to make opening entries.
- The opening balance equity is considered to be an offset account so as to keep the journal entries for the balance sheet.
- You are not required to consider individual expenses but last year’s retained earnings can be carried forward for making opening entries in QuickBooks Workforce
- Vice versa you need to make multiple journal entries to keep a record of each transaction whether it is a received amount or paid amount since there is no provision for recording every transaction in a single journal entry.
- It is essential for you to mention customer or vendor name in all kinds of journal entries whether it is account receivable journal entry, account payable journal entry, or sales tax journal entry.
- There is no need to enter the balance of inventory assets using journal entries but the inventory adjustment screen can be used to set the figure.
Opening Entries in QuickBooks Accounts using Journal Entries
- Make general journal entry is to be selected from the company menu.
- You are required to set a particular date for the journal entry and a number is to be given to it.
- An account is to be selected or created from the account column. You can arrange the selected accounts in an order you wish to appear on the balance sheet.
- The amount is to be entered carefully in the assets and liabilities column. You need to classify the assets and liabilities. If the amount is payable you cannot mention in negative number but a positive number is to be entered in each asset and liabilities column thereafter step 2 and 3 is to be repeated for each column respectively.
- You are required to ensure the debit and credit columns are equal and the difference amount is to be considered as opening balance equity for setting up a new account in QuickBooks accounts.
- Now you can click on Save and Close.
- The balances though created can be used for account receivable journal entry, account payable journal entry, sales tax journal entry if was not included in a first journal entry.
- Now a final journal entry can be created so that the remaining balance can be carried forward to opening balance equity in QuickBooks pay stub template
At last, we could say that you need to be more careful while making opening entries for fixed assets, long-term liabilities, equity, current assets, and other assets so as to avoid chances of creating a double entry in QuickBooks Accounts.