Balance Sheets

[John R. Sowden]

On 01/04/2014 01:00 AM, Chris Bester wrote:
> Hi There
>
>   
>
> Re:  My problem with Balance Sheets.
>
>   
>
> In order to solve my problem regarding opening and closing balances, Maf and
> Derek suggested that I create two Balance Sheets, side by side in the
> multicolumn report and Tweak or Message them. I have entered two Balance
> Sheet (Equile) next to each other, because I find this Sheet a better way of
> communicating my organisation's  financial situation to my committee.
> Question; what do I do now, these two sheets are exactly the same, how do I
> Message or Tweak the new financial year's Sheet to start all my accounts
> from zero and my asset accounts with last year's ending balances and not the
> same balance the previous year started with?
>
> Thanks for your help.
>
> Chris
The are several steps that you need to take to start the new year. These 
are General Journal entries, meaning not from the checking account.

Move all of the income to an "Income Summary" account.
   Debit the income from each income account for the "old year".
   Credit Income Summary for each of the amounts.

Next Move all of the expense account amounts from the expense accounts 
to the "Income Summary" Account.
   Debit the Income Summary account for each below amount.
   Credit each expense account for its total.

Move the difference between the two, hopefully a credit amount (profit) 
to the equity account.
   Debit the Income Summary Account for its balance.
   Credit the Retained Earnings account, if a corp.

Next you need to deal with the assets and liabilities.

Hopefully during the year, as you paid off loans, etc., you debited the 
interest to the Interest Expense account and debited the balance of the 
payment to the Liability "Truck Loan" (or whatever) account, thereby 
lowering the amount of the Liability.

Additionally, at the end of each "accounting period", that is, when you 
choose to present the financial state of you organization to yourself 
for posterity, or to others, such as quarterly, you should be posting 
Depreciation, that is, reducing the value of any fixed assets as they 
are consumed, down to the Salvage Value.  You depreciate the "Salvage 
Value" when you dispose of the asset.

   Credit the depreciation account for the depreciation amount from your 
Depreciation Schedule for this asset.
   Debit the Accumulated Depreciation account by the same amount.

Subtract the Accumulated Depreciation from the asset account.  That is 
the ending balance of the asset.

You now would have the information needed to create the closing balances 
of the 'old year', which is the same as the beginning balances of the 
'new year.

Hope this helps

John