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Opening Balance 2

Meaning of Opening Balance 2

Posted on July 25, 2021July 24, 2021 by deluxesurveillance

The contents of the opening balance

As already mentioned at the beginning, the opening balance consists of an asset side and a liability side.

Balance sheet page Explanation
assets On this page you have to record the use of funds, which includes your entire fixed assets and your current assets . Under fixed assets includes everything you need your company to operate.

  • Machines for production
  • Computers and other office equipment
  • Your company’s fleet

All goods that you need for consumption, processing or a short-term sale are summarized in the item current assets .

  • raw materials
  • Gasoline for vehicles
  • Office supplies such as paper, printer cartridges, etc.
liabilities This page of the opening balance sheet is intended for listing the sources of funds. The liabilities side is divided into

  • Equity
  • accruals
  • Borrowed capital (liabilities)

The equity consists of all deposits and income that are not provided by a creditor . In the case of provisions, you have to record the liabilities that you do not yet know exactly at the time of creation, but which will most likely arise. Your start-up costs are also listed on the liabilities side. A prerequisite is that this is recorded in the articles of association .

Further content is the name of your company, the names and signatures of the management and the place and date of the company foundation.

What do we understand by the terms balance sheet identity, balance sheet continuity, balance sheet context?

The opening balance must primarily be drawn up at the beginning of a new financial year. It is important that it is identical to the closing balance sheet for the previous financial year. This is the only way to ensure that the annual financial statements are consistent. In the closing balance, you show the relationship between income and expenditure within a year. This is done in an income statement . If the closing balance and opening balance are identical, the balance sheet identity is used. This is also called formal balance sheet continuity or balance sheet connection . The annual accounts consists for you of the opening balance sheet and the income statement.

What are the costs for the opening balance?

How high the costs for the preparation of the opening balance are, depends on the amount of the share capital that was brought in. It has to be notarized by a notary and this of course costs. You also have to take into account the costs for the tax advisor, who usually prepares the opening balance sheet for you.

Tip!

Would you like to know what your tax advisor can generally cost you? In our article on the subject of tax consultant costs you will find out everything you need to know and receive tips on how to save your costs!

Checklist for the opening balance

In order to be able to create an opening balance yourself, you can work well with a checklist. This checklist contains the most important points that you need to consider.

  • In an inventory you record all assets in your company
  • For the opening balance, you have to specify a key date
  • on the assets and liabilities side you show the financial situation of your company
  • the assets side is divided into fixed assets and current assets
  • the liabilities side is divided into equity and debt
  • for reservations made within one year you share the stock accounts in debit and on
  • Carry out posting record “debit to credit” for the postings
  • Close inventory accounts at the end of the year and post them to the closing balance

Opening balance to closing balance

There is a difference between the opening balance and the opening balance account. It lies in the fact that the wealth is represented by a balance sheet . With the opening balance sheet account, on the other hand, you document all increases and decreases in assets in your company. As a result, after creating the opening balance, you have to create the opening balance account. You then have to subdivide this account into individual accounts, the so-called inventory accounts . This is the only way you will be able to carry out the individual bookings in your company. To have a better overview of the many business transactions, this is not only done in a single account.

These accounts again have a debit and credit side. The SFBC thus forms a mirror image of the opening balance sheet. This is because you are working here with the posting record “debit to credit”.

  • You post increases on the assets side in debit and decreases in credit
  • Increases on the credit side are booked in the credit and decreases in the debit
  • The booking rates “Asset account to SFBC” and “SFBC to passive account” apply here.

Opening Balance 2

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