Another question.....
If I input opening customer balances as invoices from last financial year this seems to affect Sales/Income reports.
I see from previous posts that some users enter them to account Retained Earnings to stop Sales/Income becoming affected. is this the best option and good practice in terms of presenting them to an accountant?
Hi Phillip,
That's a good question. Just to be clear, setting up your business at the start of the financial year includes two steps:
1. Create invoices dated in the previous year to represent the outstanding customer and supplier balances
2. Edit the opening balance of each account to match the Balance Sheet from the end of the previous year
As long as you perform both steps in that order then it doesn't matter what account you choose to use on the invoices in step 1 because that account balance will be overwritten in step 2.
However, some users don't get around to step 2 because they don't have the balance sheet from the previous year. Because of this we suggest using the Retained Earnings account because it seems to provide the 'best guess' for the position of the business at the start of the financial year. Your accountant may disagree with us though - you should use whatever approach to customer and supplier opening balances he/she recommends.
Regards,
