Balance Sheet - Opening Balances


D

desperado98

Another question regarding final accounts.

I have completed my accounts and have an opening balances figure as I
only started using the software for that current year.

I know how the opening balances were arrived at however when looking
at previous accounts there is nothing about opening balances so I am a
little wary of using them. Can I use them in my Balance Sheet as
'Opening Balances' for submitting to HMRC and put a note in explaining
what they are?

I know this may be a strange question, however I'd appreciate any
helpful answers.
 
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R

Ronald Raygun

Another question regarding final accounts.

I have completed my accounts and have an opening balances figure as I
only started using the software for that current year.
What will the new software call the corresponding balances next year?
I know how the opening balances were arrived at however when looking
at previous accounts there is nothing about opening balances so I am a
little wary of using them. Can I use them in my Balance Sheet as
'Opening Balances' for submitting to HMRC and put a note in explaining
what they are?
The term is Balances Brought Forward, but a balance sheet tends to report
only the balances at year end, not at the beginning, except for a small
selection of accounts, namely Capital in the case of sole traders, and
whatever the corresponding thing is for companies.

Each entry in both the P&L and B/S generally corresponds to a T-account
in your bookkeeping system. Each P&L account generally starts with a
clean slate (zero balance), and each B/S account generally starts with
the balance barried/brought forward from the previous year to the current.
 
D

desperado98

What will the new software call the corresponding balances next year?
It won't as they won't exist ... or are you asking me a leading
question?
The term is Balances Brought Forward, but a balance sheet tends to report
only the balances at year end, not at the beginning, except for a small
selection of accounts, namely Capital in the case of sole traders, and
whatever the corresponding thing is for companies.

Each entry in both the P&L and B/S generally corresponds to a T-account
in your bookkeeping system. Each P&L account generally starts with a
clean slate (zero balance), and each B/S account generally starts with
the balance barried/brought forward from the previous year to the current.
If what I say next is correct then I kind of thought this just wanted
to check.

I should look at the Opening Balances and then find out which accounts
it relates to and add those opening balances to the existing balance
to get the final figure for the balance sheet?
 
D

desperado98

In reply to your message again, I now have had a look further.

What will the new software call the corresponding balances next year?
It calls them the same thing actually ... opening balances! I'm now
very confused about this.
The term is Balances Brought Forward, but a balance sheet tends to report
only the balances at year end, not at the beginning, except for a small
selection of accounts, namely Capital in the case of sole traders, and
whatever the corresponding thing is for companies.

Each entry in both the P&L and B/S generally corresponds to a T-account
in your bookkeeping system. Each P&L account generally starts with a
clean slate (zero balance), and each B/S account generally starts with
the balance barried/brought forward from the previous year to the current.
I'm not sure now how to report these in the end of year accounts. The
opening balances for example are for the cash accounts, the assets
account (carrying forward assets from the previous year), VAT, Tax and
the Retained Earnings / Profit.

Using the opening balances in the Balance Sheet (for Capital &
Reserves) and everything tallies as you'd expect.
 
P

PeterSaxton

Another question regarding final accounts.

I have completed my accounts and have an opening balances figure as I
only started using the software for that current year.

I know how the opening balances were arrived at however when looking
at previous accounts there is nothing about opening balances so I am a
little wary of using them. Can I use them in my Balance Sheet as
'Opening Balances' for submitting to HMRC and put a note in explaining
what they are?

I know this may be a strange question, however I'd appreciate any
helpful answers.
You should never have an opening balances amount of anything other
than 0.

When you enter the opening trial balance any entries to "opening
balances" should net off to 0.

If it doesn't you have made a mistake.

What was the balance sheet at the end of the previous year?

What was your trial balance in your software at the end of the
previous year after you entered the year end balances?
 
D

desperado98

You should never have an opening balances amount of anything other
than 0.

When you enter the opening trial balance any entries to "opening
balances" should net off to 0.

If it doesn't you have made a mistake.
Okay. I must have made a mistake. Although as I don't have the details
of the previous years accounts (all I have is the end of year
accounts) it's difficult for me to find that mistake.
What was the balance sheet at the end of the previous year?
Which part?
What was your trial balance in your software at the end of the
previous year after you entered the year end balances?
See above. I didn't have the trial balance just the statutory end of
year accounts.
 
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D

desperado98

You should never have an opening balances amount of anything other
than 0.

When you enter the opening trial balance any entries to "opening
balances" should net off to 0.

If it doesn't you have made a mistake.
I've had a look at the opening balances I have and they are:

Bank accounts opening balances
Assets
Depreciation
Directors Loan
Retained Earnings / Profit
Payroll Liability
VAT Liability

It doesn't balance (as I've said), however from looking at the past
accounts, the creditors section doesn't seem to tie up (which is what
would be outstanding after the end of year). I have:

VAT - £887 (my opening balance is £2100)
Taxation - £4729 (no idea where that came from, my tax is simply the
payroll liability of £240 + Corp Tax of £1100)
Accrued Expenses - £195 (again no idea what these actually are).

I suppose the total is what matters but mine is £3372 whereas his is
£5811.

I have again asked my previous accountant to send my account details
through to me (third or fourth request now) to see if these shed any
more light, however he'll probably continue to ignore my request.
 
D

desperado98

I've had a look at the opening balances I have and they are:

Bank accounts opening balances
Assets
Depreciation
Directors Loan
Retained Earnings / Profit
Payroll Liability
VAT Liability

It doesn't balance (as I've said), however from looking at the past
accounts, the creditors section doesn't seem to tie up (which is what
would be outstanding after the end of year). I have:

VAT - £887 (my opening balance is £2100)
Taxation - £4729 (no idea where that came from, my tax is simply the
payroll liability of £240 + Corp Tax of £1100)
Accrued Expenses - £195 (again no idea what these actually are).

I suppose the total is what matters but mine is £3372 whereas his is
£5811.

I have again asked my previous accountant to send my account details
through to me (third or fourth request now) to see if these shed any
more light, however he'll probably continue to ignore my request.
Another post to add to this.

My Debtors, Creditors and Cash At Bank are all effectively opening
balances for the next years accounts?

From looking at the Balance Sheet from the previous year I can
understand what Peter is saying with it being 0 as it tallies up to
the Retained Earnings amount. If I then include that Retained Earnings
amount as an opening balance too then it should be zero.

I therefore think I should be concentrating on ensuring that the
Debtors and Creditors for the previous year actually tally up with the
opening balances of this new year?
 
D

desperado98

Another post to add to this.

My Debtors, Creditors and Cash At Bank are all effectively opening
balances for the next years accounts?

From looking at the Balance Sheet from the previous year I can
understand what Peter is saying with it being 0 as it tallies up to
the Retained Earnings amount. If I then include that Retained Earnings
amount as an opening balance too then it should be zero.

I therefore think I should be concentrating on ensuring that the
Debtors and Creditors for the previous year actually tally up with the
opening balances of this new year?
Further update on this.

|'ve been looking at this for a while now and I cannot see where the
figures that the previous accountant has come from (mainly Creditors
and Debtors at the moment). Can anybody suggest anything to get me
finished with these accounts as this is the only real stumbling block
I have left.
 
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P

PeterSaxton

Further update on this.

|'ve been looking at this for a while now and I cannot see where the
figures that the previous accountant has come from (mainly Creditors
and Debtors at the moment). Can anybody suggest anything to get me
finished with these accounts as this is the only real stumbling block
I have left.-
Because you can't set up the opening balances in one journal you have
to use something like an opening balances account. There can always be
exceptions to the following due to minus balances because of credit
notes or payments on account.

The sales ledger balances should be posted using sales invoices (no
VAT) with the other side of the entry to opening balances. Similarly
with purchase ledger balances.

The bank account should be posted with a receipt or payment agreeing
to the bank statement balance. Any bank reconciliation items should be
posted separately as receipts or payments. The other side of these
entries will be to opening balances. This method is preferable to
posting the cash book balance as it enables you to continue bank
reconciliations easier.

The other balances should be posted using a journal with the balance
to opening balances.

Because you have entered all the balance sheet amounts the opening
balances entered should net off to zero.
 

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