Setting up Opening Entries for customers with knockoff-able old bills
In some cases, you may need to enter some transactions which occurred before your first financial date; for example, you will need to enter prior year's unsettled invoices so that your receipts from customers will be knocking off against those invoices well.
In such a case, when you are supposted to setting up your new book through EasyStep Interview.
Once you come across the session of the Start Date, you should choose the second option (as figure 1) and put a date that is reconciled with your very earliest uncollected invoice. For example, some of your customers may have owed you money from the beginning of 01/02/2005. Therefore you may enter 01/02/2005 as your start date (the date that you'll start to enter all of your company's transactions - historical transactions - since that date).
If historical data is not very important to you, and you are pretty comfortable with a lam sum opening entry of your customer. You can make your setup easier by choosing the first option (as figure 1) as the start date.
My personal idea is to put a date that is one day earlier than the first day of the financial year which I would like to make a new book. And usually, I'll enter all opening entries (as the historical transactions). In such a case, my fiscal year's Balance Sheet will then be able to show with a good look of Balance Retained Profit amount.
In normal practice,
- Use the first day of your financial year if you are near the start of your financial year. Usually, you'll need to enter some historical transactions (those transactions that occurred before the start date).
- Use a date of your own choosing if you are just starting your company and do not have any historical transactions.
Your books will not be completely set up until you have entered all of the transactions which occurred between (your start date) and (your first fiscal year's date).