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TUTORIAL -Opening Balances


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TUTORIAL Contents:

Introduction
Preferences
> Setup
> Roles
> Users
Activity Names
Accounting Categories
Activities

Accounts
Statuses
Members (Contacts)
Posting
> Cheque or Cash Received
>> Against Invoice
> Cheque Written
>> Against Invoice
> Cash Paid
> Cash from Cash Account to Bank
> Cash from Bank to Cash Account
> Cash Banked
> Bank Transfer In
>> Against Invoice
> Bank Transfer Out
>> Against Invoice
> Account Transfer
> Bank Interest Received

> Opening Balances
> Opening Income & Expenditure

> Invoice Sent
> Invoice Received

The Bank Reconciliation

Transaction Enquiry
Balance Enquiry

The Year End

Reporting

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In this Tutorial so far, we are lucky enough to have started from scratch. But what if this organisation has been going some time - and there are previous years? The recommended method is to start a new year fresh and, when the final numbers are available for the previous year, put them in as Opening Balances. Meanwhile all profit & loss reports will work fine for the current year.

OK, lets assume a fairly simple situation where the accounts for the last year before hontreasurer.com show a bank balance of +5700.00 and debtors of 600.00 and creditors of 1200.00. This will therefore probably show a retained profit of +5100.00. The terms used may be different on your case.

WARNING! Be careful to post only a set of transactions whose total is zero using Post Opening Balances.

To put the above example into hontreasurer.com, fire up the system and choose Transactions/Account Transfers/Post Opening Account Balances. The date should show as today, the contact as us, the treasurer, the activity as "Transfers between Accounts" and the year as the current year. We are going to post, in the current year:

  • 5700.00 to the Current Account, so set the Account to the current account and the amount to 5700 and press OK
  • 600.00 to the Debtors Account, so set the Account to Debtors and the amount to 600 and press OK

So far, so good, but now some thought is required. We now want to post:

  • -1200.00 to the Creditors Account. Why negative? Because hontreasurer.com always treats money going out, or due to go out, as negative and money coming in as positive. With one exception which is just coming up. So set the account to Creditors and the amount to -1200 and press OK. You will get a warning about -1200.00 being outside the usual range. Acknowledge this and press OK again.
  • -5100.00 to the Retained Earnings accounts. Warning: this is the only occasion when hontreasurer.com expects a negative when you might expect to give a positive value. The reason is that accountants expect a Balance Sheet to add to zero. Since the income and expenditure is really an analysis of your Bank Account and Debtors & Creditors, it usually appears as negative in an accounting system. hontreasurer.com can normally do the necessary tricks with the signs but this is one place where it can't. Sorry. So you have to set the account to Retained Earnings and the amount to -5100. acknowledge the warning about the amount being out of range and press OK again.
Now looks at Balances/Show Balances Tab. You should see two (still) equal amounts and if you expand the Balance Sheet node, the should see the bank, debtors, creditors and retained earnings accounts with the correct figures.

Note: If you start in the middle of a year, you can enter Income and Expenditure for the year to date for each activity. For an explanation of this, go to the Next Page. But remember to deduct the values you are posting to Income & Expenditure from the appropriate account.

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