The opening balance equity should be closed out to retained earnings. The retained earnings account is for all prior years profit. The above picture is from data in QuickBooks Online. This account should be closed out to retained earnings and not carry a balance. Opening Balance Equity – This account gets posted to when you create a new chart of account for a loan or item that you enter a opening balance for in the set up of the account in QuickBooks.It otherwise gets its data from earnings on the profit and loss report. This account should be avoided posting any transactions to unless you are making prior year write offs or have received adjusting entries from your CPA. Retained Earnings – This account is used to track all profits for prior years minus any distributions or dividends.In our blog series 5 of 5, common Quickbooks terms – What is Retained Earnings and Opening Balance Equity? These are special equity accounts created by QuickBooks and exist on the balance sheet. What is Retained Earnings and Opening Balance Equity?
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