Unless you've just started a new business, most of your accounts probably already have balances—you've made sales, paid bills, perhaps bought inventory and conducted a variety of other business activities that affect accounts' balances.
In this step, you'll enter your opening balances as at your conversion date. For example, if you've deposited money in your business's checking account, you will enter that account’s opening balance as at your conversion date.
Enter the balance amounts as at the last day prior to your conversion month (that is, the month you begin using your accounting software). If the current month is your conversion month and you've made some transactions already this month (sales or purchases, for example), don't include those transactions in your accounts' opening balances. Instead, enter these amounts using the transaction windows in your accounting software, to ensure that you have a complete record of your business activities for the month.
The types of accounts that you’ll enter opening balances for depend upon whether your conversion month is the first month of your fiscal year or whether it is another month of your fiscal year. Choose the information that is correct for your company file:
Enter your account balances as positive numbers. (Don't, for example, enter asset amounts as positive numbers and liability amounts as negative numbers.) You should only enter a negative amount if an account actually has a negative balance.
If an amount appears in the “Amount left to be allocated” field, your accounts are out of balance. This could be because you haven’t entered all of your account balances, or an amount has been entered incorrectly.
If you are unable to balance the accounts, speak to your accountant. If you have an amount in the “Amount left to be allocated” field, it is automatically assigned to the Historical Balancing account. When you balance the accounts later, the amount in the Historical Balancing account will automatically return to zero.
The Historical Balancing account is used during the setup process to track the difference between the opening balances you enter for your asset accounts and the opening balances you'll enter for your liability and equity accounts.
In traditional accounting terms, assets should always equal liabilities and equity (capital); This account enables you to continue using your accounting software even if your beginning balances aren't balanced. Note that you won’t see the Historical Balancing account in this window, but it will appear in your Accounts List as an Equity (Capital) account.
