Definition
The opening entry starts a new fiscal year, or a new accounting system, with the closing balances of assets, liabilities and equity from the previous period. Revenue and expense accounts are not included because they were closed to retained earnings. The entry must balance and match the prior year's closing balance sheet.
How it works
There are two situations. At each year end the opening entry is a mechanical carry-forward; Ledgeriano writes it automatically when a year is closed. When you move to new software mid-life, you prepare it from the last balance sheet of the old system.
For a migration, include customer and supplier balances per party, inventory per item if you track it, and fixed assets at cost with accumulated depreciation shown separately. Then compare the new opening trial balance with the old closing one line by line.
Use a dedicated date (the first day of the year) and voucher type for opening entries so they never mix with ordinary activity in reports.
Example: opening a new year
The closing balance sheet of the previous year becomes the opening entry.
| Account | Debit | Credit |
|---|---|---|
| Bank | 35,000 | |
| Trade receivables | 40,000 | |
| Equipment | 90,000 | |
| Trade payables | 35,000 | |
| Share capital | 60,000 | |
| Retained earnings | 70,000 | |
| Total | 165,000 | 165,000 |