INITIAL CAPITAL
To post a journal entry for your initial capital, press the 'New Journal' button on the Journal Entry page.
Example:
You are starting your company and investing £10,000.
- Make sure the business bank account is connected to Business Finance Assistant
- Ensure that 'Show accountancy Information' is enabled from 'Your Profile > Preferences'
- Press 'Journal Entries' from the main menu
- Select 'New Journal Entry'
-
Record the transaction as:
- DEBIT: Bank Account 10,000
- CREDIT: 'Paid in Capital' 10,000
OPENING AND CLOSING BALANCE
Bank | 1000 | in your favour = debit balance |
Accounts Receivables | 500 | in your favour = debit balance |
Other Assets | 500 | in your favour = debit balance |
Inventory | 1000 | in your favour = debit balance |
TOTAL ASSETS | 3000 | |
Accounts Payables | 200 | your debt = credit balance |
Other Liabilities | 100 | your debit = credit balance |
Loans | 200 | your debt = credit balance |
Capital | 1000 | your debt = credit balance |
Profit | 1500 | in your favour = credit balance (loss would be a debit balance) |
TOTAL LIABILITIES | 3000 |
Please note:
To create an opening balance as of 01/01 and to set up a balance sheet as well as a Profit & Loss report, create this journal entry for the previous year's balances as of 31/12. Please refer to this article Closing the end of the financial year to perform a year-end closing, which will allow you to start with opening balances into the new year.
You can then set up all balances from the balance sheet and Profit and Loss report. The transaction will be balanced and a year-end closing will post your profit and loss into retained earnings for the new year.
Your accounting transaction can be set up as per the example below:
- All debit balances from your balance sheet = debit entries in the transaction
- All credit balances from your balance sheet = credit entries in the transaction
- All debit balances from your P&L = debit entries in the transaction
- All credit balances from your P&L = credit entries in the transaction
BALANCE SHEET | ||
Bank | 1000 | in your favour = debit balance |
Inventory | 500 | in your favour = debit balance |
TOTAL ASSETS | 1500 | |
Accounts Payables | 100 | your debt = credit balance |
Capital | 1000 | your debt = credit balance |
Profit | 400 | not used in the transaction |
TOTAL LIABILITIES | 1500 | |
PROFIT AND LOSS STATEMENT | ||
Sales | 1000 | income = credit balance |
Cost of Goods Sold | 400 | cost = debit balance |
Utilities | 200 | cost = debit balance |
Profit | 400 |