Modifying Beginning Balances After Setup
Overview:
This document describes the process to adjust the balance for accounts after SetUp is complete.
Details:
The account balances entered during the SetUp are stored in a General Journal entry. This General Journal #0 will be given the data you specified during SetUp and is locked and cannot be adjusted once you have completed the SetUp Checklist. It is locked because of the complexity of the data contained inside. This journal will typically contain calculated amounts for the following accounts:
Accounts Receivable (the sum of your Customer balances)
Accounts Payable (the sum of all your Vendor balances)
Inventory (the sum all you Item Total Costs)
Current Year Earnings (all Income minus all Expenses for the Current Year)
Retained Earnings (Assets minus Liabilities minus other Equity)
Note: You should verify that the balances for these Accounts are correct before completing the SetUp process. (3122)
Modifying Balances for Most Accounts:
Most Account balances can be adjusted or created using the General Journal tool. With the General Journal tool, you cannot create an entry for Accounts Receivable, Accounts Payable, Inventory, Current Year Earnings, Retained Earnings, or a Bank Account (all are controlled Accounts). See using the General Journal in the User’s Guide for more information on creating new General Journal entries.
Modifying Balances for Bank Accounts:
Bank Account balances can be modified using the Balance Adjustment tool. This tool allows you to increase or decrease the balance of a Bank Account and offset the adjustment to one of your other Categories (except for controlled Accounts). See Making a Balance Adjustment in the User’s guide, Solution#3006, or Solution#3007, for more information. As of Big Business 2.6, this Balance Adjustment tool is now on the Banking Toolbar.
Modifying balances for Automatic Accounts:
The balance for Accounts Receivable can be adjusted by increasing or decreasing the balance of your outstanding Customer Invoices. The balance for Accounts Payable can be adjusted by increasing or decreasing the balance of your Vendor Bills. Inventory balances can be adjusted by creating Invoices or Bills, or by creating Item Adjustments for a particular Item. Current Year Earnings and Retained Earnings are calculated and adjusted depending on the type of transactions generated.
What If I Didn’t Enter the Correct Balances During SetUp:
If you did not enter the correct beginning balances during the SetUp process it becomes more complicated to enter them inside of the application. You may need to create an “adjusting” account to offset several of the transactions you will need to generate. This “adjusting” account will typically offset your Retained Earnings (an equity account). Some people choose to make the “adjusting” account an income or expense account so that it rolls over into Retained Earnings for the next fiscal year.
After creating this “adjusting” account, you can then create the necessary Misc. Sales (for Account Receivable), Misc. Bills (for Accounts Payable), Item Adjustments (for Inventory), Balance Adjustments (for Bank Accounts), and General Journal entries, all posted against this “adjusting” account. Entering a current year Invoice, for example, you would use a Misc. Sale, to avoid an Inventory change, and use the Posting Tool ("quill") to specify the "adjustment" account to avoid a change to Sales Income.
Caution: Please work with your accountant or Big Business Consultant to assist you in setting up and entering the necessary transactions.
One final consideration is to back date entries. If you enter a Misc. Sale dated in the prior fiscal year, the Sales Income will automatically roll into Retained Earnings on a current year Balance Sheet. Keep in mind that a prior year's Balance Sheet will then be invalid. This technique can also be applied as follows: If the "adjustment" account you create is an Equity account, after completing all entries, you can enter a back dated General Journal entry between your "adjustment" account and any Income Statement account (Income, Expense) to zero out the "adjustment" account. If posted in the prior year, the Journal entry will zero your "adjustment" account (if it is an Equity account) and the Income Statement posting on the back dated Journal Entry will roll into Retained Earnings.
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