Opening entry
In one sentenceAn entry recorded at the start of a business's books, or the first year in a new system, that records the balances of assets, liabilities and equity as they stand on that date.
Simply put
When a business starts operating or moves to new accounting software, the accounts do not start from zero. You enter what it owns and what it owes in one entry on the first day, so every account has its correct balance.
Assets are recorded on the debit side, and liabilities and capital on the credit side, and the two sides must be equal, as in any entry.
Worked example
A spare parts store moved to a new accounting system on 1 January, with these balances on that day: cash 40,000 SAR, inventory 60,000 SAR, and amounts owed to suppliers 30,000 SAR.
Dr: Cash (debit)40,000
Dr: Inventory (debit)60,000
Cr: Accounts payable (credit)30,000
Cr: Share capital (credit): 100,000 − 30,00070,000
Total debits = Total credits100,000 SAR
Don't confuse it with
Opening balancesThe balances are the amounts themselves at the start of the period, while the opening entry is the way they are entered in the books.
in FullScreen ERP
The system lets you enter opening balances for each warehouse. Warehouses and items