Opening Balance Equity Account in Quickbooks

 I know there should not be anything in the opening balance equity account.

I have recently taken over work and found a balance therein.  Can anybody tell me how to go about removing the balance properly?

 

I know not to remove the account already and I know that if the bank rec. has been forced i.e. a balance adjustment entered, a figure will occur in the opening balance equity account but I'm not sure of the procedure to go about removing the figure(s).

 

Thanks 

Comments
petersaxton's picture

Do the work

petersaxton | | Permalink

See what entries were missed that could have been due to the whole or part of the balance.

See what is wrong with the bank reconciliation. You can look at previous reconciliations or redo the bank reconciliation manually.

carnmores's picture

open up the reports section

carnmores | | Permalink

then go to PL and ALL then show all years i think you will find that there is an entry for an earlier year that may be misdated or otherwise

STAR181270's picture

Opening Balance Equity Account in Quickbooks

STAR181270 | | Permalink

 Thanks for those two replies. 

How does the figure get into the opening balance equity account? Is it like a suspense account only the figures go in there automatically?

First reply suggests that figures were missing, but could they equally well be duplicated?

Second reply: please could you tell me how to go back and check the bank reconciliations?

 

Thanks, Star

carnmores's picture

never mind the bank recs for the moment

carnmores | | Permalink

have you done what i suggested - it appears that you have a predated transaction  that will appear when you check all years PL and possibly BS individually by selecting all periods and then sorting by year

petersaxton's picture

Reasons for opening balance equity account

petersaxton | | Permalink

“How does the figure get into the opening balance equity account? Is it like a suspense account only the figures go in there automatically?”

They do go there automatically if the bank reconciliation isn’t done properly. They also can appear due to errors in entering the first trial balance.

“First reply suggests that figures were missing, but could they equally well be duplicated?”

The first time the opening balance equity account is used is usually when the first entries are put on to QuickBooks when there is a trial balance. Any trade debtors and trade creditors have to be entered with the other side being opening balance equity. The bank account balance(s) are entered with the other side(s) being opening balance equity (NB I prefer entering all of the bank reconciliation entries rather than the balance to enable future bank reconciliations to be performed easily). If the remaining balances are entered in the form of a journal with opening balance equity being the balancing line then opening balance equity will be nil. Usually errors are caused by some trial balance amounts not being entered but they could be duplicated.

“Second reply: please could you tell me how to go back and check the bank reconciliations?”

Check the previous bank reconciliations “cleared” balances to the bank statements.

I once went to a new client who had simply ticked a few entries and then clicked "reconcile". After a couple of years  she asked me why the accounts didn't look right but she insisted the bank reconciliations had been done! She didn't want me to "redo" the bank reconciliations because she'd already "done" them!

STAR181270's picture

Carnmores, I only visit once a week

STAR181270 | | Permalink

 No Carnmores, I haven't done that yet because I only visit the client once a week and that's not till later this week. I will look back and the Profit and Loss accounts for previous years but it seems like a lot of work to find these errors.  Isn't there a quicker way perhaps? Can I not just find the Opening Equity Account and work back with it?

Anyway thanks for your comments people.  By the time I go back there at end of week, I should have a better idea of how to get rid of the balance.

 

 

Tracing non-zero account balance

mrtrub | | Permalink

-- MoFromMelb

If you open the ledger, (any ledger), you will see all journal entries posted against it.  Look for a journal entry with the erroneous amount.  For example, if you have a balance of $136.78, look for a journal entry of $136.78 against the ledger.  This usually finds the error qucikly.

Alternatively, if this does not work, there is a search facility for all journal entries in the amount of $136.78, one of which will have been posted erroneously to the wrong ledger, not the open equity balance.

From my experience, this is usually the qucikest way to find the error. 

Malcolm Veall's picture

May not be error

Malcolm Veall | | Permalink

Star181270,

Read Peter's comment carefully.  While Bank Rec errors may be the source of entries - it may well be that the Opening Balance Equity entry was the Capital Account balance, (or Share Capital + retained reserves if Ltd Co),  reflecting the net book value of the bank, debtors, creditors & fixed assets brought into the QuickBooks dataset by journal when the business was moved onto QuickBooks.

STAR181270's picture

Opening Balance entries

STAR181270 | | Permalink

 Yes Malcolm, I think you mean like in Sage.....when you first put the company into Sage, the opening balances have an opposite entry which has to be cleared once all the entries have been made.  For that reason I need to go back and back and back in here and find the source of the problem.

The other tricky bit is that the figure in the opening balance equity account may not be the result of one journal entry.  It may be a number of entries, adding up to the whole.

Quite a puzzle really, isn't it.

Thank you all for your continuing advice.

 

 

Opening Balance Equity Account in QuickBooks

c.szpak | | Permalink

I haven't read all the responses on this subject so I apologise if I am repeating anything.

When you next visit your client open the QuickBooks data file, hold Ctrl and press A, this will bring up the chart of accounts.  Locate the Opening balance Equity account, should be under Type=Equity.

Double click the account and you should see all the transactions that make up the balance, review them from there. 

I have created files using opening balances from another system and would have used this account as the "clearing account".  For example, bringing forward all outstanding invoices, could this have happened in this file?

Good Luck,

 

Chris

 

carnmores's picture

your wasting your time

carnmores | | Permalink

been on holiday

 

it takes 2 mins to solve this problem , do as i suggest and yuo will see in an earlier year why the OB transaction has occurred

 

i have rarely seen so  much heat and no light over a fairly simple problem

petersaxton's picture

not pre-dating

petersaxton | | Permalink

"predating" isn't the problem - there's a difference

carnmores's picture

pound to a penny that you are wrong Peter

carnmores | | Permalink

i have never seen a 'difference' in QB in the 17 years that i ahve been using it . in any event as i said it takes 2 mins to check - it is possible to put an entry into an earlier period unwittingly and it still balances - i repeat

GO TO REPORTS - COMPANY FINANCIAL - PL - DATE RANGE ALL - THEN SORT BY YEAR -

all years will be shown and just scroll back to see which year the transcation is in and change

REPEAT FOR BALANCE SHEET

petersaxton's picture

Difference

petersaxton | | Permalink

Lets try to understand what I am meaning by difference. I don't mean that the total of the debits are different to the total of the credits. What I mean is that any balance on the Opening Balance Equity account is a difference because it is not meant to be anything real, If there is a balance on this account there is a problem. Changing the date of any entry doesn't solve the problem because the balance will remain.

carnmores's picture

we are getting closer Peter

carnmores | | Permalink

we have to establish what the account opening balance is made up of - contrary to waht you say it is possible that real transactions are part of it - as been previously noted it is often made up  of transactions that occurred in previous years  - i have laid out the way to find out  what is in the OB account and it is likely that it has arisen as a result of date entry error  - unfortunately we do not have enough info yet to determine whether the OB contains true as well as false transactions primarily beacuse we do know the number of years that the company has been  trading for  - but the method i have proposed is quick simple and efficient and works and it is often as simple as changing the date , i grant you that other transcations may have to be deleted but that can be effected from the sorted annualised PL and BS which will show exactly when they occurred and why

petersaxton's picture

Right and wrong

petersaxton | | Permalink

It's not real transactions in the sense that they are not accounted for correctly. It's like saying that recording a purchase of a fixed asset as a subscription is a real transaction because there's an actual transaction in the background.

Having a balance on Opening Equity Balance is wrong.

Changing a date won't solve the problem.

Without knowing a lot more about what has gone on we will not be in a position to judge the best way to solve the problem but 99% of the time it is either due to errors on entering an opening trial balance or errors on bank  reconciliations.

 

Sort By Year?

AGTinney | | Permalink

Carnmores

I have recently joined the discussion group to try and learn additional tips or give advice where possible and I have been following this thread.

I attempted to view the report that you mention

GO TO REPORTS - COMPANY FINANCIAL - PL - DATE RANGE ALL - THEN SORT BY YEAR

The only 2 sorts allowed on the version I am using are Default and Total.

I have been using QuickBooks since 1997 and I am currently using QuickBooks Accountant 2006

Is sort by year available in a later version?

I have a copy of Premier 2008 still unwrapped as I heard rumours that it wasn't very good. Have you used the 2008 version and if so have you found any problems/quirks?

petersaxton's picture

Why sort by year?

petersaxton | | Permalink

Why sort by year? Simply see what transactions are in the account. They are listed in date order by default.

Peter

AGTinney | | Permalink

As I explained I am simply trying to find out if there are things I am not already aware of.

I have dealt with this type of problem many times already and yes I do use the method you refer to as my first port of call.

Malcolm Veall's picture

"Sort " = column?

Malcolm Veall | | Permalink

Carnmores,

When you say "sort by year" do you mean ask for P&L column by year? OR perhaps you mean to double-click net profit and then sort that report by date?

petersaxton's picture

Multi currency

petersaxton | | Permalink

The main thing about 2008 is it doesn't have multi currency.

VAT isn't very good either but then QuickBooks and VAT have always had problems.

petersaxton's picture

Not sensible

petersaxton | | Permalink

There would never be a sort by year - it would always make sense to sort by date.

Another option

cookie71 | | Permalink

I have also used Quickbooks since it first came over from the States many moons ago.

Another option, which was the only way to check in the early days, is to go to banking then reconcile and choose the opening balance equity code as your bank account. Enter 0 in the ending balance and then continue and it will give you all entries in that account that you can the drill down from if indeed they are actual entries.

I am not sure which version you are using, apologies if you have mentioned and I have missed this.

 

 

 

carnmores's picture

wrong wording apologies

carnmores | | Permalink

go to COLUMN (next to sort) and then choose  YEAR  that will show all entries on refection it might be better to do BS first

STAR181270's picture

Sorry, I didn't realise there were so many replies

STAR181270 | | Permalink

Hello again. Sorry I didn't spot all these replies. I am original poster.

The version is 2006. The client put on 2008 but it didn't work. Took it off, reinstalled and it still didn't work. So now we are back to 2008.

I think I have diagnosed the fault and you are probably both right.  I will go back to the beginning first, but there are also problems with the bank reconciliation.  So I reckon I need to do both options to correct the problem.  I didn't realise that a balance adjustment in the bank rec. would go into the opening balance equity account.  However, it is not as simple as it might have been because there is more than one error, which means that I really do need to go back as far as possible BUT I don't want to do all the bank recs. manually again.  It would take forever and I don't have the time.  I am only there once a week.

What I find puzzling is probably a simple answer for those more experienced with Quickbooks.  If doing adjustments in the accounts (bearing in mind I have taken over from several confused book-keepers) those adjustments appear in the bank rec. window but I cannot tick on them because they will not appear on the bank statements.  So what do I do with them, leave them alone? If I click on them, because I know they are right, then the rec. doesn't balance and an adjustment is made - straight to the opening balance equity account.  I think this account should show only what I know as Capital.  Adjustments should go into a Suspense Account to be sorted later.

Star

 

 

 

STAR181270's picture

oops I meant we are back to 2006 version.

STAR181270 | | Permalink

2008 didn't work.  What does that tell you???

 

 

Add comment
Log in or register to post comments
Group: QuickBooks discussion group
An online meeting place for UK-based QuickBooks users