Chapter 1: Creating and Reviewing Opening Balances in QuickBooks Online
As described in the preface of this book, QuickBooks Online is a cloud-hosted accounting software solution for small to medium-sized businesses. Accountants and bookkeepers can assist their clients by being able to access all the information they need at any time.
Opening balances reflect the financial position of a business at the point when QuickBooks Online is brought into use. Where a business has only just been set up and they choose to use QuickBooks from the very beginning, there will not be any opening balances to speak of except for cash or equipment introduced by the business owners.
Where a business has been operating for some time and has perhaps used spreadsheets or other accounting software in the past, there will be a financial history that results in values that will affect the balance sheet in different ways.
It is very important, especially when moving from one method of accounting to another, to ensure there is continuity. Without a correcting starting position, future profits could be over or understated, and the values filed in various tax returns could be incorrect.
In this chapter, we will cover the following topics:
- Should opening balances be in place before using QuickBooks?
- Opening balances – Customers
- Opening balances – Suppliers
- Opening balances – Bank
- Opening balances – VAT/GST/Sales Tax
- Other opening balances
