disposition of "Opening Balances" account

[Mike or Penny Novack]

>
> During 2011 I purchased an piece of property and set up both an asset 
> and a liability (mortgage) for it. I also took out a small loan and 
> set up the liability of it also. Both used the "Opening Balances" as 
> the initial source.
>
> When I closed the books for 2011 the opening balances still remain 
> should they not have rolled into equity like the income and expenses 
> did? When I set up my accounting system initially all the opening 
> balances went away when I closed at year end for the year or at least 
> they are no longer present.
>
> If not how should I handle the account? I would like to clear it.
>
> Thanks,
> Jay

a) No, they should not have gone away. The action of "close the books" 
is to bring the balances of the temporary* accounts of type equity 
(that's what Income and expense accounts are) into the permanent equity 
account. Accounts of types asset, liability, and equity  are not emptied 
by "close the books". Review the "fundamentals of double entry bookkeeping".

b) Why would you want to clear it? A liability account goes to zero 
balance when the liability is paid off. A fixed asset account goes to 
zero balance when the asset is disposed of or its value has been fully 
depreciated away.

Michael

* Originally (hundreds of years ago) in the dawn of double entry 
bookkeeping income and expense transactions were immediately posted 
against equity. Then some bright persons figured out that if they 
instead used temporary accounts and only posted the balance to equity at 
the close of the accounting period they could see more useful details of 
the business.

-- 
There is no possibility of social justice on a dead planet except the equality of the grave.