Opening balances in your new product represent closing balances from your current system and this is how they will actually be entered in your new product.
So the opening period we set in Trading Year and Periods is actually the period before the first trading period in your new product.
It doesn’t matter if you have already set these periods as, until you start processing transactions, these can be changed at any time.
Then, after closing balances have been entered, the period will be advanced to make the balances entered in the prior period become the opening balances of the current period.
This is probably best illustrated and understood with an example. We will use the same example used in Trading Year and Periods.
You have 12 months in your financial year.
– Your business year-end is March (i.e. the first month or period of your business year is April).
– You intend to start using your new product from July (i.e. July is month or period 4).
– If you were not entering opening balances, the settings would be the same as before:
Current Nominal Ledger – period 4
Month Name of period 1 – April
Current Sales Ledger – period 4
Current Purchase Ledger – period 4
To enter opening balances, instead of setting the periods to July (4), you set them to June (3) as follows:
Current Nominal Ledger – period 3
Month Name of period 1 – April (This is unchanged. The first month of your accounting year is still April.)
Current Sales Ledger – period 3
Current Purchase Ledger – period 3
Closing data from your current system is then entered to your new system as explained in the following sections.
In each section, period-end processing advances the ledgers to the first trading period (i.e. July, period 4 in the above example) as required to start posting new transactions.