Opening balances refer to the assets and liabilities your organisation has when you start using DEAR to manage your inventory. If you are currently using Xero or QuickBooks Online which you will be integrating with DEAR, then you will need to enter balances from the Xero/QBO system. If you are using DEAR without these accounting systems, you will need to enter balances from your existing accounting records. This is what we call conversion balances or opening balances.
NOTE: If you are unsure about what needs to be included in your opening balances, please consult with your accountant or bookkeeper.
Table of Contents
- Transferring Balances
- Accounts with Special Features
To transfer over balances from a previous accounting system:
- Navigate to Settings -> Reference Books -> Financials -> Opening Balances.
- First, choose your Conversion date. This is the date you are going to stop using your previous system and start using DEAR. For example, if we select May 2016 as the starting date, we will need to enter opening balances into DEAR as of the 30th of April 2016.
- Get the trial balances from the previous system as of the 30th of April 2016 and enter the balances against all the accounts in the chart of accounts.
- Identify any asset accounts for Inventory or Fixed Assets by checking off the Inventory/Fixed Asset box for that account.
- Start entering all balances from your existing accounting system against the same accounts in DEAR. Some accounts have special features to keep in mind.
Accounts with Special Features
DEAR works with the bank statement lines, so there maybe be transactions in your previous system that are not yet shown on your bank statements. In this case, you will need to enter the bank statement value and include the transaction that has not gone through yet elsewhere.
Example: The trial balance from the previous system shows a balance for $1,100 in the EFT Bank Account, but the bank statement shows the balance for that account is $1,000. This is because there has been a transaction worth $100 which has not yet come through to the bank statement.
- Enter the bank statement value ($1000) against the bank account in DEAR.
- Enter the outstanding transaction value ($100) into an Unrepresented Funds account. If you do not have an Unpresented Funds account, you can create one in the chart of accounts. If you are using DEAR standalone, you can do this by navigating to Settings -> Reference Books -> Financials -> Chart of Accounts and clicking + Account. If you are using Xero/QBO, you will have to create the account in Xero/QBO and then synchronise the accounting system with DEAR.
- Unrepresented Funds required account settings: Account Type – Current Asset, System Account – None, Accepts payments.
- When the $100 appears on the bank statement, it can then be coded against the Unpresented Funds account to cancel it out.
Accounts Receivable and Accounts Payable
Accounts Receivable as of the 30th of April 2016 are all the sale invoices that are still outstanding on that date. Accounts Payable are all the purchase invoices still outstanding on that date.
To enter Accounts Receivable and Accounts Payable:
- Enter balances against the accounts in the Opening Balances tab.
- For Accounts Payable, go to the Outstanding Purchases tab to enter invoices.
- For Accounts Receivable, go to the Outstanding Sales tab to enter invoices.
The total amount the balance is out by is displayed at the bottom of the screen.
Stock On Hand
To enter stock on hand:
- Navigate to Settings > Reference Books > Opening Balances and select the Stock on hand tab, this is where we can enter all our quantities on hand as of the 30th of April 2016.
- The stock amounts must be imported into DEAR in a spreadsheet. Click Import stock on hand from CSV and download the template. Click on the + sign to see all required and optional fields. Once you have completed building your spreadsheet, simply Upload it back into DEAR.
- See more about importing your starting Inventory List and Stock on Hand in the Getting Started Guide.
If there is an amount in the opening balances for fixed assets (e.g. Office Equipment for $1000), a fixed asset or a list of fixed assets adding up to this value must be added to this tab. Learn more about Fixed Assets.
To add fixed assets to the opening balance:
- Go to Financials -> Fixed Assets tab.
- Click + Fixed Asset.
- Click + Fixed Asset on the new screen.
- Proceed to fill in the fixed asset details. Mandatory fields are marked with an asterisk (*).
- Click OK and Save your changes. This item is now automatically registered in your fixed asset register, and you can start posting depreciation.