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Setting up a business in Quickbooks

  • 28 posts
  • # 116452

Hi, I am a new student who has just passed Level 2. I am currently playing around with Sage and Quickbooks just trying to get my head around everything.

At the moment I am playing around with a friend's old accounts trying to add them to a double entry system. He has given me the year accounts that his accountant has given him. I have been working on trying to set up the opening balances So are I have created debit entries for the current assets and credit entries for currently liabilities everything balances except for a small amount and this appears on the balance sheet as net liabilities and then eventually at the bottom of the balance sheet as balance carried forward.

What is this balance carried forward? Is that the capital in the business?

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  • 47 posts
  • # 116454

PaulW said:

Hi, I am a new student who has just passed Level 2. I am currently playing around with Sage and Quickbooks just trying to get my head around everything.

At the moment I am playing around with a friend's old accounts trying to add them to a double entry system. He has given me the year accounts that his accountant has given him. I have been working on trying to set up the opening balances So are I have created debit entries for the current assets and credit entries for currently liabilities everything balances except for a small amount and this appears on the balance sheet as net liabilities and then eventually at the bottom of the balance sheet as balance carried forward.

What is this balance carried forward? Is that the capital in the business?


 Hi Paul

Your balancing account should be the Opening Balance Equity Account.  You should be posting everything dated the last day of the previous financial year. Once you have finished posting all your closing TB entries, you should have a balance in Opening Balance Equity that matches the brought forward retained earnings.  The last thing you will do is journal the OBE to Retained Earnings - also on the last day of the previous FY.  This will ensure that the first day of the new FY has the correct retained earnings balance carried forward for the new year.

The balance carried forward is the shareholders equity.  It is the value of the business at the date of the balance sheet.  Assets rather than just capital

Assets=Liabilities+Capital

  • 28 posts
  • # 116455

 

 Hi Paul

Your balancing account should be the Opening Balance Equity Account.  You should be posting everything dated the last day of the previous financial year. Once you have finished posting all your closing TB entries, you should have a balance in Opening Balance Equity that matches the brought forward retained earnings.  The last thing you will do is journal the OBE to Retained Earnings - also on the last day of the previous FY.  This will ensure that the first day of the new FY has the correct retained earnings balance carried forward for the new year.

The balance carried forward is the shareholders equity.  It is the value of the business at the date of the balance sheet.  Assets rather than just capital

Assets=Liabilities+Capital


 Thank you for the information that makes a little more sense to me now.

Would I need to go back to my friend or his accountant to find out what actually comes under the other debtors, other creditors or can these be all clumped together?

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  • 47 posts
  • # 116457

Morning Paul

 

It is always better to have the full list of debtors and creditors at the year end.  Quickbooks (desktop or online) will not allow you to post to Debtors or Creditors without a customer or supplier name.  So if you do not have the breakdown you will have to

either

1) Create an Other Debtors Current Asset account and an Other Creditors Current Liability Account and then journal payments to them when received or paid.

0r

2) Create an Opening Balance Debtors Customer and an Opening Balance Supplier with the relevant opening balances and then pay those off in the normal way when payment received or paid out.

The problem with either of those methods is if you need to retrieve a statment of account for an individual supplier or customer becaue you won't have the full history.  Or if there is a disputed invoice and you won't be able to identify it.

 

Sylvia

  • 28 posts
  • # 116462

Thank you for your help, things are much clearer now.


Paul


 

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