You would post the opening balance to a dummy debtor/creditor account, then post the invoices to that account instead of sales/purchases.
For example, creditor opening balance is a credit to dummy creditor. Purchase invoices then credit the real CCA and create the debit get posted to the dummy account to contra the journal
I am not sure how to link this to your past paper, but hopefully it helps you make some sense of it.
HTH
-- Edited by FoxAccountancyServices on Wednesday 25th of September 2013 09:37:26 AM
Thinking about this a little further, it may be that when each creditor was set up, an opening balance is considered to have been put in via the supplier set up page (creating a credit in CCA).. The software has to produce a debit on the other side to keep the TB balanced. Your opening balance journal will be a credit, so you have to figure out where the software puts the debit, so you can apply the credit to it.
It might be that the debit was posted to a suspense account - and so your credit would be to this account. It might be that the debit was posted to the P&L expense account - and is this case, your journal would need to credit this account
If, say, the opening balance is posted via supplier set up page and dated 01.01.13, and posted to the P&L code, remember that these costs were accounted for in 2012, and so we don't want a charge in the 2013 year. You need to cancel this out with your opening balance journal, so that the P&L code only contains this years charges.
Hope this makes sense!
-- Edited by FoxAccountancyServices on Wednesday 25th of September 2013 09:48:36 AM
I have a very straight forward question that I'm sure you lovely people will be able to explain to me in very plain English and I'll try not to waffle - have a nasty habit of doing that!!!
I just seem to have hit a wall with the Opening Balances and just don't seem to be understanding them properly. I'm just doing some practice papers at the moment and of course there's the opening balances to post. Including the Debtors Control Account (£480) and Creditors Control account (£360). I'm slowly getting to grips with the whole computerised stuff now and understand that I have to enter the opening balances of a customer or supplier as an invoice, however, if I do that, I then end up with double the amount in the DCA / CCA because I've then entered all the remaining opening balances for the other nominal accounts.
Could someone please give me a slap round the face and just run through the process of entering opening balances as a whole so I'm 100% sure i'm understanding it all. It does say on one paper that (note: Debtors and Creditors balances should already be there) so i'm reading that as 'don't enter those amounts as they're already posted.
Im sure I make things far more complicated for myself than needed sometimes and end up confusing myself!!!
The thread relates specifically to VT but at the bottom of it I show how I set up a set of Opening Balances and the other side of each entry is the Opening balance Contra which could be thought of as a debtor / creditor control account.
As you can see the the debtor and creditor balances are created by all of the other entries. They are already there without you entering them specifically which is what I believe your question was hinting at.
Hope that the link combined with Michelles answer makes everything clearer,
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.
Hi guys, and thank you, it's really appreciated you taking the time out to reply.
With regards to the Debtors/ Creditors opening balances, I just left them as they were i.e. in the fusion software you post an invoice against the relevant customer/supplier and it will automatically be posted to the relevant control account.
When I cam to enter the remaining opening balances, such as Motor Vehicles, MV Depreciation, Tools & Equipment, T&E Depreciation and so on, that's the bit where I got myself slightly confused. For some reason, when reading up and refreshing my memory about opening balances, I had the suspense account in my mind. Why? I don't know...I could have sworn I read that some were using this as the second entry (unless it's time to replace the old reading glasses). But this wouldn't be the case would it? Surely, when I'm entering the opening balances, they would also be posted against the Capital account?
I had a look Shaun (knew I could count on you to reply aswell as Michelle - she's great at answering questions - thank you), anyway, I did look at the link and had a good read through along with looking at VT which has the 'opening balance contra' and understand all that, but with fusion (really despising this software), there doesn't seem to be that option - only the suspense account I can see.
I think i'm confusing myself more and more lol and shall not rest till I get it properly!!!
I'm sorry also that I'm probably not explaining things properly either but help on this is soooo appreciated.
If it It does say on one paper that (note: Debtors and Creditors balances should already be there) then I would presume that the opening balance entries are to ensure that the figures on the suppliers and customer acccounts total the same as the control accounts. If there are no supporting journal entries to post then that should be the case. I have seen on many occasions postings made in error on clients accounts which result in the control accounts not agreeing with the ledger balances usually because the original opening balance figures were not correct. Is it possible to see the customers and supplier accounts balances ?
