Does entering an opening balance in say your current account or credit card account in QF affect the net or gross profit figures you see in the balance or P&L sheets?
I only started using QF since March and I am trying to understand how it is calculating my net profit for what transactions I have entered so far.
No, bank balances post to the balance sheet not the P&L. An opening balance is either an asset or liability depending on whether you’re in the black or red.
So no matter what figure i have as an opening balance in say my current account, it will make no different to the profit figures for working out tax owed for my SA tax return and so on?
That’s correct, however the double entry for the bank opening balance would be posted to suspense (9998). Typically what you would do is journal this balance out of suspense into the appropriate nominal codes.
Let’s say I start using QF halfway through the year and I have a bank opening balance of £15,000. This £15,000 relates to the sales made in the first half of the year. When I enter the OB it would debit the bank and credit suspense (suspense is just a temp holding area until it’s properly explained). Now I need to journal that balance out of suspense into General Sales (4000) or a sales code of your choosing, only when this has been done will it affect the P&L.
Hope that makes sense!
But, my issue is that if I journal the opening balance into General sales I will effectively be accounting for this money twice. I started using QF and entering records from March 1st, and before this I used a simple money in money out style method of accounting. I have those records up until the end of February when I started using QF from the 1st of March. Now when it comes to my SA Tax Return, which I have to do very shortly, I will be taking the figures for my profit from my old system and then the additional profit figure from QF to get my total profit to be able to work out tax owed.
Now if I understand this correct, if I journal the opening current account balance to general sales it will add that to my profits, however I don’t want it to do that because it will make it seem I have profits that I don’t really have.
Under my old system it was very basic and I only started using QF when I became VAT registered, so never kept records of balances in accounts or anything like that before.
Is there some was of just journal the opening balance so it affects nothing, but does not sit in the suspense account. I don’t want to just have a 0 opening balance as the actual figures in QF wont match my real statement figures. I am really stuck with this, any ideas?
Just thinking outside the box, but could I simply work out my profit from the old system and then from QF and simply deduct the profit part it works out from the opening balance journal from the old system profit so it gives me the right amount?