New client - has done the previous 2 years accounts himself.
Using VT, entering everything from bank statement - want to enter opening balance for the bank account - can't for the life of me think of the credit entry?? will this be capital introduced (even though it's not) or I am being a total dumb ass??
Thanks in advance
-- Edited by Shamus on Thursday 8th of October 2015 05:28:14 PM
when I'm opening a new clients books everything gets entered as a batch of opening balance contra's.
For the bank the journal would be
Dr Bank:Current Account Cr Creditors:Opening Balance Contra
but of course there's a contra for every element of the previous set of accounts in order to establish position (its not as bad as it sounds).
Everything should balance out from the contra's leaving you with the correct balances in all of the relevant buckets.
I think that the step that you have missed out is actually establishing the full position rather than only the bank.
You don't have to use journals to do the above but personally I find that the easiest route.
Not a dumb ass at all. First time that I used VT after a couple of frustrated days of being unable to get my opening balance sheet perfect I ended up scrapping everything and starting again.
Hope ther above makes sense.
Let me just see if I can find the opening balance contra help page...
Yep, here you go. Straight from those nice people at VT... Ooh, not tried the importing trial balance yet. I'll have to have a go at that... Mmm, wonder what entries I would need to put into the Universal Input sheet to do it that way (just getting used to that for sorting and renumbering. Really powerful bit of kit. Just wished that VT used the same names throughout there software so that the UIS wasn't so hit n miss for starters... Sorry, I'm like a kid in a sweetie shop when there's half a dozen different ways of achieving the same end (so there's my Christmas week planned ).
Would be really interested to hear how others approach opening balances. Is my journal approach the standard? Is it an "Oh, thats how we used to do it before the UIS?". Whatever the answer the underlying principle remains that the opening balances are Opening Balance Contra's.
Anyway, here you go (have fun) :
If you have not being using VT Transaction+ since your business started, you will have some opening account balances to enter.
Opening balances can be entered using any of the normal transaction entry methods (see Transaction entry methods topic). Transactions should be dated on or before the last day of the period covered by the previous accounting system. When entering opening balances, it is more convenient (but not absolutely necessary) to set the current financial year to the year last covered by the previous system. This is done by clicking on the current year caption on the application status bar. If necessary, you can begin entering day to day transactions before you have entered opening balances.
Bank balances
To enter an opening bank balance:
1.
Click on the Receipt - REC button on the main toolbar (or the Payment - PAY button if the account is overdrawn)
2.
In the Receipt (or Payment) dialog, enter the amount of the bank balance. Do not enter any VAT
3.
In the Analysis ledger box, select Creditors
4.
In the Analysis account box, select Opening balances contra
5.
Click on Save to save the transaction
If you have a bank reconciliation from a previous system, do the above for the statement balance and each outstanding item in the reconciliation.
Customer and supplier balances
If you want the customer and suppliers ledgers to show the individual invoices outstanding in the old system:
1.
If you are operating the VAT cash accounting scheme, check that the Cash accounting box is ticked in the Set Up>VAT dialog
2.
Click on the Sales invoice - SIN button on the main toolbar (or the Purchase invoice - PIN button)
3.
In the invoice dialog, enter the date and the amount of the invoice. Only enter the VAT if you are operating the VAT cash accounting scheme
4.
In the Analysis ledger box, select Creditors
5.
In the Analysis account box, select Opening balances contra
6.
Click on Save to save the transaction
7.
Repeat the above for each outstanding invoice
Entering a full set of balances from another system
A journal (JRN button) can be used to enter a full set of opening balances from another system, including bank, customer and supplier balances. A trial balance can also be automatically imported from most other accounting systems via a spreadsheet or CSV file by choosing the Edit>Import Trial Balance command.
Checking and correcting the numbers
1.
Choose the Display>Trial Balance command. This lists all the account balances in a company
2.
Click on any account name to display the entries making up the account balance
3.
To correct any entry, right mouse click on it and choose Edit Transaction from the pop-up menu
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
And it strikes me that I may not have explained what I mean by a full set of journals so here's an example of an average set that I use when setting up a new client who may previously have been on different software (think we all know which software I'm talking about, lol).
All actual figures have been changed and are intended for illustration purposes only (they still add up to a balancing amount as they were changed by multiplying and dividing a couple of times.
All journals are dated on the last day of the previous period (shown from the perspective of the Opening Balance Contra account).
Reference
Details
Asset
Liability
JRN 000001
B/Fwd Turnover
51250
JRN 000002
B/Fwd Tax
425
JRN 000004
B/Fwd Pension Costs
3000
JRN 000005
B/Fwd Fixed Assets
60175
JRN 000006
B/Fwd Depreciation
57845
JRN 000007
B/Fwd Share Capital
100
JRN 000008
B/Fwd Tax
2115
JRN 000009
B/Fwd Debtors
70
JRN 000010
B/Fwd Bank
7180
JRN 000011
B/Fwd Heat & Light
200
JRN 000012
B/Fwd Directors Remuneration
34970
JRN 000013
B/Fwd Directors Social Security
815
JRN 000014
B/Fwd Telephone
1055
JRN 000015
B/Fwd Post & Stationary
1100
JRN 000016
B/Fwd Travel & Subsistence
6985
JRN 000017
B/Fwd Motor Expenses
9200
JRN 000018
B/Fwd Subscriptions
630
JRN 000019
B/Fwd Business Insurance
755
JRN 000020
B/Fwd Sundry Expenses
75
JRN 000022
B/Fwd Bank Charges
555
JRN 000023
B/Fwd Bank Fees
160
JRN 000024
B/Fwd Insurance Prepayment
235
JRN 000025
B/Fwd Debtors
145
JRN 000026
B/Fwd Profit & Loss
16605
JRN 000027
Transfer to Directors Account
3195
The opposit side of each of the above is Creditors:Opening Balance Contra.
Ta Dah. You have a set of accounts in VT to match the accounts that the previous accountant may have had in something like say, Sage, but minus the history of course that created each of the balances.
As mentioned in last nights message this is not the only way to do this. There is also the UIS or enterng P&R transactions per the VT approach. I just like the journals approach as its what I'm used to (and VT do admit that its an acceptable approach in the first line of the third section of their opening balanced helpsheet).
HTH,
Shaun.
P.S. amended only to add the line about the flip side of the transactions being the Opening Balance Contra (which should come out of the excercise as zero or something has gone wrong).
p.s.2 amended to emphasise that the above opening balances relate to the Opening Balance Contra account (so are the opposit way around to how one would expect them to be).
-- Edited by Shamus on Friday 27th of September 2013 09:44:53 AM
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
That's great thank you for your help and such in-depth answer Shamus.... I'm printing this off for future reference. As it was a small sole trader I decided to use Excel in the end, much easier ad quicker to use excel for small clients. Really useful for next time though.
Thanks again
No probs at all and always good to see more people adopying VT which personally I think is an excellent bit of kit.
Once you get used to VT you will find it just as easy as Excel but as you say, for now if Excels enough then go with it.
kind regards,
Shaun.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
After reading through this and some other threads, I'm now going to go back to VT and stick with it for this exam. I have enough 'trial' days to get through it, but that Fusion is plain ****. I have no idea what they were thinking when they were creating that, but it's probably the worst software I've come across in my long drawn out search!!! At least with VT there's more help and support than there is on the other one. Students don't seem to like answering questions on the ICB forums lol!!!
Now Im feeling a real dumb ass and embarrassed to ask the question but here goes. Could you run through your journal entries for me. In particular why are fixed assets a liability and depreciation an asset? I'm obviously miss-interpreting what you are trying to demonstrate. Just starting out myself and only using excel at the moment but will definitely be using VT when I have paying clients.
sorry for any confussion, the account being shown is the opening balance contra so everything is the flip side of how you expect it to be
All entries in the contra should add up to zero. the other side has created your opening positions.
here is the actual journal for the fixed assets which is dated the day before the period end in order for the opening balances to be perfect:
Account
Entry details
Debit
Credit
FA - equipment, fixtures & fittings: Cost -b/fwd
B/Fwd Fixed Assets
60,175.00
Creditors: Opening balances contra
B/Fwd Fixed Assets
60,175.00
And of course the depreciation is the opposit of the above.
Think that I'll go and put a note in the original post to emphasise what it actually is as I can see where your confusion comes from as the assumption that the reader understands the concept of the OBC is key to understanding the explanation.
many thanks for pointing out that minor ommission (mmm, minor like leaving the steering wheel off a car, lol),
kind regards,
Shaun.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Students don't seem to like answering questions on the ICB forums lol!!!
And accountants are not allowed to.
Once you get used to VT it's a fantastically powerful bit of kit. I just wished that there were more training materials available for it as there are invariably half a dozen different ways of doing the same thing (as shown in this thread) and I do sometimes wonder if I have adopted methods of doing things different to everyone else.
Which of course isn't actually wrong but it does mean that you could get three completely different correct answers to a question posted on here!
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Shaun, This is really helpful thank you. But the reality of my work is that I rarely get more than the opening bank balance and if I do it is months after I have started. This is due to the previous years accounts not being done or the only information available is the P&L. Often accountants say just do cash accounting - which is no help to my clients trying understand their businesses on a month to month basis. I have had several clients come to me just so they can get their accounts done monthly and have information monthly. Often they have previously given all their receipts to the accountant and have no idea what has gone through the books and what hasn't.
The opening balance issue in some circumstances is beyond your control but with VT you can enter input for the current year before inputting the opening balances for the prior year (something that I've done many times myself).
That basically means that until you have the closing balances to bring forwards you are only able to advise on this years P&L.
You should have all of the required information well before the next period end so all of the books and records will be resolved in good time.
I appreciate that not all software is that flexible espechially those that try to make their software idiot proof rather than the VT approach of assuming that the people using their software are not idiots.
If anyone does use VT for this purpose then remember to take a backup of your work to date before entering the opening balances.
Also, for VAT registered busiensses where the periods do not match up to the year ends then you will have additional difficulties around there.
Plus the major issue is with accruals and prepayments not being sorted out until mid year or later (for the first year only).
All in all, not the best sollution to enter opening balances 3/4 of the way through the year but if thats what you need to do its very easy and doesn't mess up anything else when doing that with VT (I love that product).
kind regards,
Shaun.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
).
