Recording expense opening balance
Mike or Penny Novack
stepbystepfarm at mtdata.com
Sun Oct 4 08:03:44 EDT 2009
>On Sat, 3 Oct 2009 04:29:41 pm maljam5 wrote:
>
>
>>How do I record an expense opening balance. For instance, if I set up an
>>expense account for 'phone bill' and I know that I have already spent $500
>>year to date, what transfer account would I use to record this amount so
>>that at the end of the year I can print a report on the total spent for the
>>year?
>>
>>
>
>By definition, you can't open your books with an expense already incurred. As
>I see it, you have two options:
>
>
Accounts of type "income" and "expense" are actually temporary accounts
of main type "equity".
In this case you want to open your books as of some date in the middle
of the year BUT you can still use the date of the start of the year for
the opening transaction. Now you create an account (under equity) with
name such as "gains and losses up to xxx" (where xxx is the actual start
date) and you use this account for the other side of the split
transactions entering YTD so far income and expense items.
You are adjusting the total of "equity" that was created by the opening
entries.
Michael
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