Opening balances
In one sentenceAccount balances on the first day of the financial period; they must exactly equal the closing balances on the last day of the previous period.
Simply put
What one year ends with is what the next year starts with. So the first thing the accountant and the auditor check is: do the opening balances match last year's approved statements?
A difference between them signals an entry recorded after the statements were approved, or an error in transferring balances to new software.
Worked example
A contracting company's retained earnings at the end of last year were 300,000 SAR; this year it made a net profit of 120,000 SAR and distributed 50,000 SAR.
Opening balance (= last year's closing)300,000 SAR
Add net profit for the year120,000 SAR
Less distributions50,000 SAR
Closing balance: 300,000 + 120,000 − 50,000370,000 SAR
Don't confuse it with
Opening entryThe opening entry is the way balances are entered for the first time, while opening balances are the amounts themselves.
in FullScreen ERP
The system lets you enter opening balances for each warehouse. Warehouses and items