Opening balance equity

Opening balance equity is the offsetting entry used when entering account balances into the Quickbooks accounting software. This account is needed when there are prior account balances that are initially being set up in Quickbooks. This account is used to provide an offset to the other accounts, so that the books are always balanced.

Once the account entry process is completed for all accounts, compare the total opening balance equity to the sum of all beginning equity accounts listed in the prior account balances. If the balances match, then the initial entry of accounts was accurate. If not, then review the initial account balances entry to see if there was a data entry error.

Once all initial account balances have been entered, the balance in the opening balance equity account is moved to the normal equity accounts, such as common stock and retained earnings. From this point forward, it should no longer be possible to access the opening balance equity account, which means that access to the account should be locked down.

Related Courses

Bookkeeper Education Bundle 
Bookkeeping Guidebook