opening balance account
I have small doubt regarding the opening balance account.Excatly where i have to create this account.
Plz can any one will help me.
Jimmy Michael replied
The opening balance account is an offset account for G/L account opening balance, A/R opening balance, A/P opening balance and inventory opening balance.
All the opening balances are posted to asset, equity or liabilities and it is been offset with the opening balance account that is located in he drawer expenditure or could be probably in the equity.
Finally, the opening balance account balance should be zero after opening balance process finished.
The accounting equation for balance sheet should be correct after opening balance is finished:
Asset = liabilities + equity
If you place opening balance account in the equity but the equation is not correct afterwards, then it is wrong, so you must place it in the expenditure drawer.