When I created the debtors and creditors accounts in Quickbooks, I entered the opening balance for each of them. I noticed however that instead of allocating the amounts to creditors and debtors accounts, it did record them automatically in either an expense or an income. How do I update this? Do I have to do a journal entry to correct it? It does not allow me to correct in each debtor or creditor the account. Thank you.
When entering an opening balance, an income and accounts receivable (A/R) account are impacted for debtors and expense and accounts payable (A/P) account for creditors. The accounts are selected as the default account when you created your account. They can be edited once the original transaction is created.
Here's how you can edit the income account assigned to debtors:
- Go to Sales.
- Click Customers at the top.
- Select the debtor's name.
- Select Transaction List.
- Click on the opening balance invoice created (this will be on the top transaction of the list).
- Once you have it opened, change the income account in the detailed line item of the invoice.
- Select Save.
Accounts receivable appears in the debit column of a transaction journal. This represents that the debtor still owes you money and will stay in Accounts receivable until the invoice is paid.
To edit the expense account assigned to creditors:
- Go to Expenses.
- Click Suppliers at the top.
- Select the creditor's name.
- Select Transaction List.
- Click on the opening balance bill created (this will be on the top transaction of the list).
- Once you have it opened, change the expense account in the detailed line item of the bill.
- Select Save.
Accounts Payable appears in the credit column of a transaction journal. This represents that business still has a credit memo or balance due to the creditor. Accounts Payable will be impacted by this opening balance until the bill is paid.
This will change the default accounts created, shop. Let me know if you have any other questions.
Hello there, Dolores Rowley.
Thank you for posting here in the Community. It would be my pleasure to provide clarification regarding the debtors and creditors opening balance in QuickBooks Online.
When entering customer or vendor opening balance, it'll impact other accounts. For customers, it'll affect Accounts Receivable and the income account.
For Suppliers, it'll be the Accounts Payable and the Expense account. When you create the QuickBooks subscription, the default account selected would be Expense and Income.
For more insights about the opening balance, you visit the article I recommend below:
Please don't hesitate to come here with all of your QuickBooks needs. The Community is here to ensure your success.
We prepare our accounts using the accruals basis and so the customer and supplier opening balances should be posted to the Balance Sheet and not the Profit and Loss account.
Is there a way to change this please?
Welcome to the Community page,
So there is no issue with this, the system is working as designed to. If you think it is not then we suggest speaking with your accountant about this and what it means. The information the previous agent has given you is correct and there is nothing going to change if you use cash or accrual as well.
The debtors and creditors amounts will post to the balance sheet, the income and expense amounts will post to the Profit and Loss, the opening balances for customers and suppliers usually post to both those places.
Thank you for your reply.
The opening balance is posting to an income account (profit and loss) but the income has already been accounted for pre QuickBooks. If I continue with your advice then we would be accounting for the income twice.
I was hoping I would be able to post to an opening balance equity account but I don't seem to be able to change that, only a different income account? I was hoping for some advice as to how to account for the opening balances correctly as by entering it via the New Customer window is not correct for a balance brought forward.
What you could do is delete the other method of accounting for the income, or delete the invoice that is created when entering an opening balance and then manually create a journal posting to opening balance equality and debtors if you want to do it that way you can.