Issues with an Opening Balance in GnuCash

[John R. Sowden]

Good evening:

I think you made one of my points in your first sentence. Sometimes you 
do not know what the opening balances will be for the new period.  For 
instance, I consolidate a group of purchases into a single amount and 
call it an asset, which I depreciate. Sometimes I have to go through 
invoices and exclude items that would be expensed, then the final amount 
needs to be moved from its temp home to the asset group where it will 
slowly die.  These things must be done right, but sometimes the stresses 
of the day don't allow for those items to be processed immediately.

The other reason that I don't use the "opening balance" locations in 
accounting programs is that different programs get sensitive as to 
editing of "opening balances".  Some do not allow them to be edited at 
all.  You have to make adjusting entries.  I'm too lazy to try to keep 
track of the "difference amounts" in order to make the final amounts  
accurate.  I do this on all accounting now, so if I go back to my 1992 
GL, I can look at the Beginning Balance Transactions (in my case there 
are usually about 4 of them, as many accounting programs limit the 
number of entries per transaction.  As I think you mentioned, of course 
these only affect Assets, Liabilities and Equity.

Re: your comment of using one ongoing file, you are right because there 
would be no Opening Balances.  Those were entered back at the beginning 
of time.  But . . . , another hook of mine, I separate each fiscal year, 
save them to a CD separately.  Let's say I was selling automatic machine 
guns in 2014 (for which the income tax rate is 100%), and I was being 
audited for the fiscal year 2015/2016, and as I was going through the 
transactions, I made a mistake and let the IRS auditor see all of the 
transactions with the substring "auto",  I might have a problem.  There 
are more real world reasons for me to split my GL by fiscal year.

So, in the end, the math is the same.  The difference in my case is 
recording and understanding the data in past years.

By the way, I keep getting the mail from gnucash, because I am hoping 
that some day enough people will complain about the data entry scheme , 
and cause it to be fixed.  I have an aversion to having my numbers that 
I entered change in front of my eyes as I am making a transaction 
entry.  My attention needs to be on my accounting, not the behavior of 
the program that I am using. Also, I have found pieces of transactions 
in 'orphan', and another account of a similar name, so a transaction 
would balance.  No warning, just gone.  I assume that the quicken data 
entry model is used to bring in the quicken users, including ones, as in 
my case, that use linux now.

My comments were in relation to an accounting issue, not gnucash.

John



On 06/23/2016 05:35 PM, DaveC49 wrote:
> John,
>
> I don't see what the problem is with entering opening balances if you know
> what they are at the time you create a new file. The opening balances
> entered during the new file simply create a set transactions from the
> account whose balance has been entered (Db if an asset with a positive
> balance etc) with the corresponding (Cr of the same amount) to
> Equity->Opening Balances. This is exactly the same as you would do manually
> entering the same transaction as an opening balance and the dates and
> amounts in the splits can all be edited later (preferably before first
> reconciliation of the account) if the entered data is incorrect after
> adjustments etc have been applied.
>
> If you use a single file and merely adjust the accounting period dates for
> the new financial year then the balances are automatically carried forward.
> They don't appear specifically in each account but will in generated
> reports. If you wanted it to appear as a transaction in each account then a
> dummy Close account to Equity -OpeningBalance followed by an Opening
> Balances transaction to reestablish the opening Balance for a new period
> could achieve this.
>
> Cheers
>
> DaveC49
>
>
>
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