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Senior Explorer *

Opening Balance Equity is Negative Has Not Balanced Out

So,

 

My OBE is negative even though I have made payments to my CC and line of credit accounts throughout the year. It is as though Quickbooks does not make an automatic debit from OBE when I have been making payments to those accounts and matching the transaction when I reconcile. The only thing being debited and credited is my checking account and the CC/LOC the payment was for. The CC accounts still carry a balance till now, so what will happen wit the OBE? What am I missing here?

1 Comment
Established Community Backer ***

Re: Opening Balance Equity is Negative Has Not Balanced Out

OBE is an equity account used when you enter starting balances

once you have done that, then you move OBE to owner equity with a journal entry

for a positive OBE balance, debit OBE, credit equity

do the opposite if the balance is negative

 

OBE is not updated with normal transactions.

 

If you make a payment on debt, your bank balance goes down, and debt goes down so there is no change to total equity.  Equity is total assets less total liabilities