Ireland Opening Balances

[Arthur]

Hello,

I am just finding my feet with book keeping, and wanted to know how I can handle opening Cash Balances, when commencing a set of accounts.

For the sake of balancing the trial balance, I noted the opening balances for the "Cash" and "Savings" accounts with a corresponding opening entry in the "Revenue" account. However I am not sure if this is correct, as that revenue was not earned in that month.

I understanding that there is a process for closing accounts to "Owners Capital" account, however this is really for personal finances, and I need to start the accounts at some point, without the ability to have the opening balances fully balanced prior to starting.

Any information that you may have is greatly appreciated.

Many Thanks

Arthur

 

[DTA93433]

Your cumulative Cash balances should be segregated between what (if any) was originally contributed to the business as capital (owner's equity) vs. what was collected due to sales. This would make up your credit side of your opening balance entry. If none of the cash was earned to due revenue (sales), than the offsetting credit would be to owner's equity.

 

[Arthur]

Many Thanks Stephen. That makes sense. As the very first entry in this set of accounts, I will post the CR opening balance to Owners Capital, and segregate going forward. Thanks again!