Desperately needing some help! My friend is the treasurer for a local organisation and for long enough, keeping track of their finances on a spreadsheet was sufficient. However the organisation grew and they decided they needed electronic accounting software to keep track of everything and started using the free version of Tas Books. This is an organisation where members pay annual membership fees and these fees are used to put on conferences and events like that. There aren't really any "sales" as such.
When the accounts were being set up, he followed the Tas instructions for creating an opening balance in the bank account. The problem now is that this opening balance keeps showing as a liability in the BS. I believe the transaction he performed was dr the bank account (a/c 1800 in NL) with £x and cr Opening Balance Control account £x (a/c 9999 in NL). The bigger problem is, this was back in 2011. It was only picked up when I was asked to have a look at their previous balance sheets last week. I only have an HND in Accounting and we didn't cover anything like this!!!
Can anyone possibly shed any light on this please? How do we get rid of this liability? I'd be so grateful for any advice.
On the face of it, it looks fine except that the CR value should probably have gone into an Accumulated Fund account, or similar, depending on the structure of the organisation.
This is similar to a Capital Account for "normal" businesses. If you journal the 9999 account into the fund account, it should not show as a liability on the balance sheet. It would have been the opening balance that any surplus income would have been added to at the end of each accounting period.
You haven't said what type of structure the organisation is operated under (incorporated, or not), which may affect this slightly but the principle is the same
Thank you so much for getting back to me. I'll give this a try tonight and let you know how it goes. The organisation is now set up as a private company limited by guarantee.
