How To: Enter Opening Balances
Table Of Contents
Introduction
When implementing Khaos Control or moving from another accounting system, you will need to enter your opening balances to ensure your accounts accurately reflect your financial position.
Entering opening balances typically involves:
- Creating the required nominal accounts.
- Creating and mapping bank accounts.
- Entering opening balance journals.
- Entering customer and supplier opening balances.
- Verifying that all balances match your previous accounting system.
Following these steps will help ensure a smooth transition and accurate financial reporting from day one.
Before You Begin
Before entering opening balances, make sure you have:
- A copy of your previous system's trial balance.
- Customer and supplier balances.
- Bank account balances.
- Stock valuation figures.
- Guidance from your accountant where required.
Step 1: Create the Required Nominal Accounts
You will need nominal accounts for your opening balances before they can be entered.
Typical accounts include:
- Bank accounts (for example Sterling Account, Deposit Account or Credit Card Account).
- Customer Opening Balance.
- Supplier Opening Balance.
- Any other opening balance accounts required for assets, liabilities or equity.
Examples may include:
- Wages and salaries.
- Buildings or property.
- Motor vehicles.
- Insurance.
- Equipment.
Important: Consult your accountant if you are unsure which System Type should be used for a particular opening balance account.
For information on creating nominal accounts, see How To: Create Nominal Accounts.
For information about nominal account classifications, see System Type and Account Type Nominals.
Step 2: Create Your Bank Accounts
Before entering bank account opening balances, set up the corresponding bank accounts in Khaos Control.
You will normally need:
- One bank account for each currency used.
- Matching nominal accounts for each bank account.
For setup instructions, see How To: Create a New Bank Account.
Step 3: Enter Opening Balance Journals
Opening balances are typically entered by creating journals between your opening balance nominal and the relevant accounts.
- Open the [ Accounts | Nominal Accounts | Nominal Accounts ] tab.
- Add the required nominal accounts to the lower journal grid by:
- Double-clicking the nominal accounts, or
- Dragging and dropping them into the grid.
Alternatively, use Quick Journal Entry. - Enter the required debit and credit values.
- Enter a note, such as:Opening Balances
- Press Ctrl + S or click Save.
Journal Rules
| Transaction Type | Effect |
|---|---|
| Debit | Moves money into an account |
| Credit | Moves money out of an account |
You can create:
- One debit and multiple credits.
- One credit and multiple debits.
- Multiple debit and credit entries provided the journal balances.
Example 1: Entering a Bank Account Opening Balance
To enter £100 into a Sterling Bank Account:
| Account | Debit | Credit |
|---|---|---|
| Sterling Bank | £100.00 | |
| Opening Balances | £100.00 | |
| Total | £100.00 | £100.00 |
This increases the Sterling Bank balance and reduces the Opening Balance account accordingly.
Example 2: Allocating Wage Balances
| Account | Debit | Credit |
|---|---|---|
| Staff Wages - Office | £1,298.00 | |
| Staff Wages - Telesales | £1,116.50 | |
| Staff Wages - Warehouse | £789.77 | |
| Staff Wages - Accounts | £461.11 | |
| Sterling Bank | £3,665.38 | |
| Total | £3,665.38 | £3,665.38 |
This moves money from the bank account into the various wage accounts.
Step 4: Enter Stock Opening Balances
The Stock and Stock Adjusted nominal accounts already exist within Khaos Control.
When an opening stock adjustment is posted, Khaos Control automatically creates the following journal:
| Account | Debit | Credit |
|---|---|---|
| Stock | £123,400.00 | |
| Stock Adjusted | £123,400.00 | |
| Total | £123,400.00 | £123,400.00 |
The journal is created automatically when the stock adjustment is posted.
Important: Always verify the balance of the Stock nominal account immediately after entering opening stock and before processing any transactions that affect stock, such as invoices or stock movements.
If the balances are incorrect, see Amending Your Opening Stock Balance later in this article.
Step 5: Enter Customer and Supplier Opening Balances
- Open the [ Accounts | Nominal Accounts | Trial Balance ] tab.
- Right-click in the left-hand grid and select Enter Opening Balance.
- The Opening Balances Dialog opens.
- Use the lookup button to select the customer or supplier.
- Enter an invoice reference.Recommended: Prefix opening balance references with OB, for example:
- OB000123
- OB000124
- Enter the gross value of the opening balance, including VAT.
- Enter the posting date.
- Select the appropriate nominal account:
- Customer Opening Balance for customers.
- Supplier Opening Balance for suppliers.
Important: These nominal accounts must already exist and be configured with the correct System Type. - Tick Credit Note if:
- You owe the customer, or
- The supplier owes you.
- Select the appropriate tax rate.
- Decide whether to tick Post Tax:
| Option | Meaning |
|---|---|
| Unticked | VAT has already been included in a previous VAT return |
| Ticked | VAT has not yet been included and should appear in a future VAT return |
- Select the currency.
The customer or supplier must use the same currency. Currency cannot be changed once transactions have been posted.
- Optionally enter a note.
- Click:
- OK to save the balance.
- Add to continue entering additional balances before saving.
Step 6: Check Your Balances
Once all opening balances have been entered, review the:
Your balances should match those from your previous accounting system.
Example Trial Balance
| Description | Debit | Credit |
|---|---|---|
| Sterling Bank | £1,000.00 | |
| Deposit Account | £300.00 | |
| Customer Opening Balances | £800.00 | |
| Buildings | £20,000.00 | |
| Staff Wages - Accounts | £400.00 | |
| Employers NIC | £25.00 | |
| Opening Balances | £21,625.00 | |
| Supplier Opening Balances | £650.00 | |
| Bad Debts | £50.00 | |
| PAYE/NIC | £200.00 | |
| Total | £22,525.00 | £22,525.00 |
The debit and credit totals must balance.
Amending Your Opening Stock Balance
If the opening stock valuation has been entered incorrectly, you should:
- Reverse the original opening stock journal.
- Post the correct stock value.
Important: Only use this method if the Stock and Stock Adjusted nominal balances match. If they do not match, investigate the discrepancy before proceeding.
Step 1: Reverse the Incorrect Stock Balance
- Open the [ Accounts | Nominal Accounts | Nominal Accounts ] tab.
- Add the Stock and Stock Adjusted nominal accounts to the journal grid.
- Enter the current incorrect balance:
- Credit Stock.
- Debit Stock Adjusted.
- Enter a note such as:Reverse incorrect opening stock balance
- Save the journal.
Example
| Account | Debit | Credit |
|---|---|---|
| Stock Adjusted | £123,400.00 | |
| Stock | £123,400.00 | |
| Total | £123,400.00 | £123,400.00 |
This returns both nominal accounts to zero.
Step 2: Enter the Correct Stock Balance
- Create a new journal.
- Add the Stock and Stock Adjusted nominal accounts.
- Enter:
- Debit Stock.
- Credit Stock Adjusted.
- Enter a note such as:Corrected opening stock balance
- Save the journal.
Example
| Account | Debit | Credit |
|---|---|---|
| Stock | £123,456.78 | |
| Stock Adjusted | £123,456.78 | |
| Total | £123,456.78 | £123,456.78 |
Additional Information
Accurate opening balances are essential to ensure:
- Trial Balance reports are correct.
- Balance Sheet values are accurate.
- VAT reporting is reliable.
- Customer and supplier balances reconcile correctly.
- Future financial reporting reflects the true position of the business.
Taking the time to verify balances before processing live transactions can help avoid significant adjustments later.