Opening balance equity QuickBooks is an automatically generated account created by QuickBooks to offset the opening balance transactions. It helps maintain the balance of your accounts from day one so that accounting can continue properly. While managing this account, you may face specific problems or doubts that require answers. That is why we have brought this comprehensive guide to give you insights into the account and guide you how to Change Opening Balance in QuickBooks.
QuickBooks is a packaged deal that offers advanced tools and features to manage your business’s finances. While creating a new account with QuickBooks Desktop, you will need to enter several details to track your daily transactions. It also includes your real-time account balance for the current day. The amount you enter here is the day’s opening balance. Sometimes this amount might be miscalculated, do not worry; this can be amended following simple steps. Read our blog below to learn how to change the opening balance in QuickBooks. Further, get information about the QuickBooks opening balance equity.
Understanding the different aspects regarding opening balance equity can be challenging. If you are unable to Change Opening Balance in QuickBooks properly, you can get in touch with our QuickBooks specialists at the helpline number +1- 855 738 2784 and receive immediate advise on solutions
What is QuickBooks Opening Balance Equity?
The opening balance equity in QuickBooks is an offset entry arising when users enter accounting entries into QuickBooks. While setting up prior account balances in QuickBooks, this account becomes necessary. It ensures that the books remain balanced at all times as it works as an offset to other accounts. Once the account entry procedure is over for all accounts, you can compare the total opening balance equity to the total of all the initial equity accounts listed in the prior account balances.
The initial accounting entry is said to be accurate when the balances match. If they don’t, you’ll have to review them to see where the error occurred. After entering the opening balances in QuickBooks, the balance from the opening balance equity account gets transferred to regular equity accounts like retained earnings and common stock. Following this point, you won’t have access to the opening balance equity account as it gets locked.
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What is the need for Opening Balance Equity in QuickBooks?
QuickBooks accounting software only recognizes double-entry accounting. So, when you enter balances from previous accounts in QB software, there isn’t a balanced entry to match them. For instance, a debit entry has no credit opening balance. QuickBooks beginning balance gets stored in the equity account as an offset in such cases.
Why is it necessary to maintain your Opening Balance?
Here are the reasons that make it mandatory to maintain QuickBooks opening balance:
1. To represent the correct financial status of your business.
2. To product accurate statements that be used further in other business operations.
3. To maintain equilibrium in your accounts.
4. To ensure steady record maintenance.
5. For ethical taxation purposes.
Creating an Opening Balance in the account
To begin recording the transactions for the day, you need to input the opening balance for the day. Here is how you can do so-
1. Click on the Accounting menu.
2. Select the Chart of Accounts option,
3. Find the relevant account.
4. Tap on the View Register option.
5. Navigate to the column of Accounts.
6. Search for the Opening Balance Equity field.
7. Record the date and balance carefully.
8. Compare this balance with your real-time account balance.
9. If this matches, you can reconcile your month’s bank statement.
10. If this does not match, let us help you fix the opening balance in the further blog.
You can also do so by learning how to change opening balance in QuickBooks through credit or bank account. The steps to Change Opening Balance in QuickBooks are as follows:
- Visit the Settings section in QuickBooks and tap Chart of Accounts.
- Now, right-click with your mouse anywhere in the chart of accounts tab.
- Select new.
- Choose the credit card or bank account for the account type.
- Follow the steps mentioned below to execute in the Add New Account screen:
- Enter the necessary information in the fields where asked.
- Tap the Enter Opening Balance catch.
- Even if no transaction record exists and the account has been set up, you can still access the enter opening balance button.
- An Adjust opening Balance option will appear when you enter the transactions. So, you need not enter the opening balance.
- Now, click the Ending Data with the ending balance before setting up the QB start date from the last received statement.
- Hit OK. Then, save and close.
If any outstanding credit card or bank charges remain, you will have to pay for them to ensure proper reconciliation.
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Steps to take after entering opening balances
Now, you need to take the following steps while you learn how to change beginning balance in QuickBooks:
- Extract the closing balance from the last bank statement.
- Any outstanding control can raise the amount.
- On the other hand, outstanding deposits will decrease the amount.
- Now, enter a journal entry where you credit the opening balance equity and debit the bank or credit card account.
- Tap the Company menu and opt for the Render General Journal Entries option.
- Write a number for the journal entry and set the date.
- Now, go to the account column. On the debit side, choose a bank or credit card account.
- Change beginning balance in QuickBooks online by entering the debit amount calculated in the above steps.
- Choose the account option from the drop-down menu.
- Hit the Opening balance Equity option.
- Enter the credit column amount calculated above.
- Through the opening balance or equity, enter the pending transactions. The account should be treated like a revenue/ expense account by making checks or deposits.
- Reconciliations will be available without impacting the balance sheet of the previous period and those transactions.
- Reconcile every account’s opening balance journal entry through the mini-reconciliation procedure.
Editing the existing Opening Balance in account
If your QuickBooks opening balance does not match your bank account balance, you will have to amend it to reconcile your monthly statement to generate an accurate report. It requires learning how to change beginning balance in QuickBooks online. Follow these steps-
1. Click on the Settings button.
2. Select the Chart of Accounts option.
3. Locate the relevant account.
4. Tap on the Action column.
5. Now, press the Account History button.
6. Navigate to the Opening Balance entry.
7. Ensure that the correct date and column have been mentioned in this field.
8. Select the Opening Balance entry.
9. Click on Edit.
10. Rectify the amount to match your bank account balance.
11. Hit the Save button.
12. Your Opening Balance has been adjusted and you have successfully learned how to adjust beginning balance in QuickBooks.
Ways to Delete Opening Balance Equity in QuickBooks
You can delete and create the opening balance equity in straightforward steps. The steps for QuickBooks change opening balance are as follows:
- Tap the Gear icon initially.
- Then, choose Chart of Accounts.
- Select the account holding the transaction and tap View Register.
- Fill in the opening balance on the filter through the drop-down menu.
- Tap Apply, followed by Edit.
- Now, head to the screen named Deposit Transaction. Tap More.
- Now, click Delete and Confirm the decision.
Ways to Close Opening Balance Equity Account
After you edit opening balance in QuickBooks, undertake the following actions to close the opening balance equity account and finally Change Opening Balance in QuickBooks:
- Launch the QuickBooks application and look for the profit and loss/ income statement.
- Now, filter the income statement report to the closing fiscal period.
- Note the opening balance.
- Search for the New Journal Entry window to form a new journal entry by putting in the last day of the closing period date.
- Access the income statement and click opening balance equity account. Form a debit account.
- Keep following the last line of the entry required while selecting the income summary account.
- Then, form credit to all the opening balance equity accounts.
- After you’re done learning how to change opening balance in QuickBooks online, you can tap save and close.
- All the calculations should lead the opening balance equity account to come to zero or launch a balanced account.
Can I change the account type from/ to Opening Balance Equity?
No, it is not possible to change the account detail type from/ to Opening Balance Equity. However, if you do find yourself in a fix and want to learn how to change opening balance in QuickBooks desktop, you can delete or make the account type inactive to create a new one.
- Tap the Gear icon.
- Choose Chart of Accounts.
- Select the account on your screen that you wish to delete.
- From the Action drop-down menu, select Make Inactive.
Now, you can follow the steps to create an opening balance equity account. This is how to fix opening balance equity in QuickBooks online.
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Ending the Process
If you want to finish fixing opening balance equity in QuickBooks fully, you need to take the following steps. It involves marking the journal entry reconciled manually to let it be the opening balance during reconciliation. It will be the starting point that summarizes the previous transactions in the bank account up to the balance date. Do so as follows:
- Go to the sidebar menu and select Accounting.
- Head to Chart of Accounts.
- Click view Register after finding the account holding the transaction.
- Tap the journal entry to expand the view.
- In the checkmark column, keep tapping the checkbox until you see R in the box. The entry will be marked reconciled.
- Click Save and exit the account register. Hopefully, this clears up how to change beginning balance in QuickBooks successfully.
Entering the correct opening balance in your QuickBooks record is beneficial to ensure that valid statements and reports are generated. It also provides transparency in your financial records. If you face any hurdles while learning to change the opening balance in QuickBooks, we are happy to sort this out for you. Feel free to contact our expert team at +1- 855 738 2784 to learn tips and tricks to instantly Change Opening Balance in QuickBooks.
What leads to opening balance equity in QuickBooks?
When you set up the company for the first time, opening balance equity in QuickBooks enables zeroing out the imbalances in the double-entry software. Balancing the books when they haven’t been reconciled on the first day and stand with a significant debit or credit balance can lead to inaccurate calculations. Therefore, the need for this account arises.
What is the opening balance equity account type?
This account is for one-time use only and should be locked after your company setup is done.
How to use the opening balance equity account in QuickBooks Online?
After entering the opening balances of each account, verify the total amount. You need to enter this amount in the opening balance equity account to balance things off in the beginning. Then, you will ensure that the accounts remain balanced throughout.
Explain Retained Earnings and Opening Balance Equity.
Although they may seem similar, retained earnings and opening balance equity have differences. These are explained in their meaning. Retained earnings are shareholders’ earnings after deducting the past year’s distributions and deductions. You should not post transactions in this account unless an adjustment entry comes. Otherwise, its data comes from the profit and loss report from the earnings section.
Opening balance equity, on the other hand, holds the beginning balances of a new chart of accounts for a loan or item when you enter the opening balance and set up a QB account. You should close out this account for remaining earnings and not hold any balance.
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