OPENING BALANCE

[Tim Frost]

Anne,

I am not an accountant, but my understanding, based on setting up a
company and using gnucash for that company since its creation is:

On Wed, 2016-05-11 at 17:47 +0100, Anne Okonkwo wrote:
> Hi
> Please I have figures in my Opening balance on the Equity side of my
> Balance sheet at the end of an accounting year. Is that meant to
> happen or
> is it meant to be zero balance at the end of an accounting year?

The Opening Balance represents the starting balances for all of the
assets and liabilities (such as bank accounts or credit cards) as at
the date when you started to use gnucash for this set of accounts.

When I started using gnucash, the only finances I was tracking were my
personal finances.  Because I had existing assets and liabilities (such
as bank accounts and credit cards) I had to record the initial balance
of each of those assets/liabilities at the time when I started to use
gnucash, and those initial balances were summarized in the equity
account 'Opening Balances'.  At a later date, I started a company from
scratch, and used gnucash (with a separate set of books) to track
finances for that company.  This meant that:

The balance sheet for my personal accounts shows an 'Opening Balances'
equity entry representing my net worth at the date when I started using
gnucash.

The balance sheet for the company shows a zero value under 'Opening
Balances', because the company didn't have any equity (or assets or
liabilities) at the date of formation, and gnucash has been used since
the company was formed.

In each case the 'Opening Balances' entries should not change, because
they represent a snapshot in time - effectively "at start of this
gnucash account file".  

Once a set of accounts is set up, the only way a new account can get a
non-zero balance is from a transfer to/from an existing account, which
doesn't affect the Opening Balances for the chart of accounts.

> 
> If it is meant to be zero, why then do I have figures and can anyone
> help
> solve the issue.

As indicated above, I only expect opening balance to be zero if the
accounts started at a time when the net worth of the entity (person,
company, ...) is zero.


Tim

> 
> Thanks in anticipation
> With warm regards,
> 
> 
> 
> *Anne Temitope OKONKWO*
> THE HORD INC. LIMITED| www. <http://www.aiesecnigeria.org/>thehordinc
> .com
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