Account opening balances are the balances of your accounts as at the first day of your conversion month.
If you were in business prior to your conversion month, your accounts are likely to have balances. It is crucial to enter these balances so that you'll be able to continue tracking them in future reports such as the balance sheet, your bank accounts, inventory, receivables and payables.
1) Conversion month refers to the month you start utilizing Financio for your business accounting.
2) It is highly recommended that you consult your accounting professional before entering an opening balance.
What to enter
The balances you enter depend on whether your conversion month is also the first month of your financial year. If your conversion month:
- is the first month of your financial year, you enter the opening balances of your asset, liability and equity accounts only.
- is not the first month of your financial year (for example, if your financial year starts in July but your conversion month is September), you can enter the opening balances of all your accounts.
Your account opening balances can be retrieved from your trial balance report, balance sheet or profit & loss report prepared for the period immediately prior to your conversion date. If you were using a different accounting software prior to this, you will also be able to generate your required opening balances from there.
Additional notes about bank account balances:
You can enter the following amounts as the opening balance of a bank account:
- the bank account balance that appears on your balance sheet or trial balance reports as at the day prior to your conversion date. For example, if your conversion date is 1 July, this is the bank account balance as at 30 June.
Your cashbook balance should account for uncleared deposits and payments. You can calculate your cashbook balance by taking into account the transactions not yet cleared by your bank as at the conversion date and the balance that appears on your bank statement at that date.
For example, assume that RM500 worth of deposits and RM1000 worth of payments were uncleared as at your conversion date (that is, they had not appeared on a bank statement). The cashbook balance would be calculated as shown below:
Bank statement balance on conversion date RM10,000 ADD uncleared deposits + RM1,000 SUBTRACT uncleared payments – RM1,500 Cashbook balance on conversion date = RM9,500
Source Reference: http://help.myob.com/wiki/display/ar/Enter+account+opening+balances