Opening Balances for bank accounts + journals for them

Hi All,

I have a few questions which i cant seem to get my head around.

I have created a new quickfile account for 2020 as the accounting period for the company ends today and we wanted a fresh start as things are in a big muddle with the current qf account and have no idea what is going on.

I am struggling to understand the Journals section. Can anyone help me understand how they work.

For example, I have created bank account for hsbc gbp account which will have starting balance on 01/01/2020 of £10,000.00 and a hsbc euro account which will have a balance of 5,000.00

I have also created a american express credit card account which will have a starting balance of -£25,000.00

Is it necessary to create a journal for each and every account? or can they be combined?

Can you simply just create the accounts and trade without creating the journals? What will happen if this is the case?

Can anyone help me asap as i have only till end of tomorrow to understand and start using the new account.

Thanks alot in advance.

You can either create the accounts and add a starting balance with the correct start date. Or create a journal and do it thag way. Either is fine but I’d recommend doing the first option.

Can you see attached image and confirm that it is correct?

I opened 3 accounts with opening test balances for today. two hsbc accounts with plus balanace and american express credit card with negative balance. It automatically created 3 journals.

I might be the thickest person in asking this but can anyone tell me why the hsbc accounts come under the red column and the american express accounts in the green. I thought it would have been vice versa as the amex account is in negative.

In terms of your own book-keeping, positive bank account balances are “debit” and overdrawn balances are “credit”. Yes, this is the reverse of what you’re used to from reading the statements your bank sends you, but it does make sense - a bank statement is the bank’s view of you, whereas what you have in QuickFile is your view of the bank, so the debits and credits should be reversed.

A positive balance on your current account is a liability (credit) for the bank and an asset (debit) for you, because the bank has to be ready to pay you the money when you ask for it, and money they lend to you on your Amex card is an asset (debit) for them and a liability (credit) for you because they will get it back when you pay off the bill.

Hi,

It makes sense when you break it down that way! Thanks alot. So does the COA look correct of the opening balances?

Yes and no - the bank accounts look sensible enough (the EUR account will show on the COA as the GBP equivalent), but of course this is double-entry book-keeping so there has to be a balancing entry somewhere else for your opening bank balances and that gets put by default onto the “suspense account” which counts towards your P&L. You will need to somehow work out what that opening balance actually consists of and create an appropriate journal to clear out the suspense account.

Normally if you were moving from another accounting system onto QuickFile you’d have a “trial balance” from the previous system that breaks this down into things like fixed assets, share capital, retained earnings from previous years, etc. etc. but in your case you say you already have a QuickFile account that is “in a big muddle” - you will probably need professional help to work out how to balance out your new suspense account, at which point it may be easier just to have your accountant/book-keeper straighten out the old QF account rather than creating a new one…

As predicted by you it has come up as a positive balance on P+L sheet as suspense account.

Now, can anyone guide how do you balance the suspense account ? Do you create journals to lower that figure? If so, can you show an example in my scenario.

What can you use for amex as stock was bought with the card so how would i go about accounting for that?

This is going beyond my expertise now, I think you really need to talk to a professional accountant or book-keeper (I’m not one) who can look at your specific figures from your previous year and better advise on what needs to go where. I’m usually OK on helping people work out how to represent something in QuickFile, but I can’t help with what you need to represent in the first place.

1 Like

I don’t think anyone can help balance the suspense account without first knowing what the total comprises of.

The bank balances could be retained earnings, share capital, deposits, basically anything.

You need to work out what the real totals were for everything before you switched over and then journal out the suspense account to the correct places.

2 Likes

You cannot clear the suspense account without having a trial balance at the opening date (effectively a balance sheet) with all your other assets and liabilities - as mentioned above these will be stocks, debtors, creditors, retained earnings etc. You cannot do this any other way.
This means you will need to sort out the “muddle” that is your existing Quickfile account - I am afraid there really is no other way.
You can “trade” in the new account in the meantime - just make sure you correctly tag all the bank entries and reconcile them to bank statements (i.e. agree the balances) at least monthly.
It sounds to me, however, as if you really do need to engage an accountant - or get your current accountant to look at the year just ended.
Do you do business as a sole trader or a limited company?

This topic was automatically closed after 7 days. New replies are no longer allowed.