Hi
Can anyone tell me why on Liability Account and Equity Account the minus sign is showing. does it mean the Account as to much money in or not enough ?
As when I have been inputting I know I have put extra into both accounts, so it should show plus.
I asked my account and he said the accounts are at a minus
Help as he also said that solar accounts are so simple he does not understand it
Hi Geraldine,
In Solar Accounts a negative balance for a liability account means someone else owes your business money. For example, say you start with a Mastercard balance of zero, then you 'take out' money by purchasing goods worth £80 with the card - this will create a positive balance of £80. Now let's say you 'pay into' your Mastercard £100 by transferring funds from another bank account - this will result in a negative balance of -£20. This negative balance says, "Mastercard owes my business £20".
A similar situation applies to Equity balances - a negative Equity balance means, "The business owners owe money to the business".
In general, you get a negative balance for Liabilities and Equity accounts if you pay more money into the account than you take out, or if you set the Opening Balance to be negative.
Regards,
