Setting Up Beginning Balances in QuickBooks

J. Carlton Collins

1.      It’s not a straight forward process.

2.      Make sure you have an accurate trial balance (that balances) as of the day before you plan to start using QuickBooks. Again, all amounts must be accurate else the resulting reports will not be correct. If necessary, hire a CPA to compile the trial balance for you..

3.      Start by creating an equity account named “Beginning Balances”

4.      Remember to enter all amounts as of the trial balance date.

5.      Enter All Balance sheet opening balances in the Opening Balance box for each account except for accounts payable and accounts receivable accounts.

6.      You have two options for entering accounts payables detail as follows:

a.      Enter all payables using the enter bills screen, or if you prefer,

b.      Enter a journal entry assigning each amount to the correct vendor.

7.      You have two options for entering accounts receivables detail as follows:

a.      Enter all payables using the invoice screen, or if you prefer,

b.      Enter a journal entry assigning each amount to the correct customer.

8.      Enter the revenue and expense line items as a general journal entry.

9.      For all inventory items, enter your Inventory details regarding quantities on hand. There is no opening balance amount for each individual inventory item, but there is a field for the starting cost of each item. You should calculate the cost of your items using average costing, and insert the appropriate average cost for each inventory item. This amount will be used to deplete “inventory” and increase “cost of goods sold” as sales are made.

Extra Note - For balance sheet accounts only, you can either use the "opening balance" field when creating a new account, or a journal entry, whichever you prefer.  When you use the "opening balance" field QuickBooks will automatically insert the balancing debit or credit in an account called "Opening Balance Equity".  If your Trial Balance has balances in Profit and Loss accounts you must enter these using a general journal entry.  You cannot enter balances for the Accounts Receivable and Accounts Payable accounts in this manner; these amounts must be entered by creating the specific Customer and Vendor accounts and entering balances for each, or by creating a bill for each posted against an equity account.