Firstly, I think your program is of great value and thank you! However I entered my bank accounts and the starting balance for each as on the statement. After the 1st year end with Manager, there is an opening balance equity line. Everything seems to balance on the balance sheet (with the opening balance equity included in the calculation) however how can the opening balance go to 0 for the next year? Can I move it to retained earnings or does it belong elsewhere? Thank you for your support!
First, what version number are you using?
Second, what are you referring to as “opening balance equity line?” There has never been anything named “opening balance equity.” Older, obsolete versions of Manager used to have an automatic account named Starting balance equity that appeared when setup was improper, in order to balance the books. I suspect that is what you are referring to.
Manager is a perpetual accounting system, and balance sheet account balances simply continue from year to year. They do not “go to 0 for the next year.” Even when Starting balance equity was part of the program, you could not move its balance anywhere, because that balance indicated mistakes. You had to fix the mistakes.
So, update your software. Then come back to the forum and explain exactly what you are seeing. Illustrate with screen shots.
This was done by setting the correct starting balance for owners equity.
The newer version calculates the starting balance of Owners equity for you instead of creating the Starting balance equity account.
Actually, that is not quite right. Recent versions place any imbalance during setup into Retained earnings. Owner’s equity is an account you would have to create on your own. Or, a sole trader/proprietor may rename Retained earnings as Owner’s equity according to this Guide: https://www.manager.io/guides/6971. Regardless, the imbalance is posted to the built-in account named by default as Retained earnings.
Thank you Patch & Tut… I created in equity Money invested in business chart of account and allocated it there and the starting balance equity got removed. Afterall it was money in the checking account from the previous year. Greatly appreciated your feedback on this great software!
What you did was not the correct, approach, @Patty. There are several completely separate issues involved, based on what you have written:
- First and foremost, you apparently did not update your software as I recommended if you are still discussing the obsolete Starting balance equity account. Update first, or nothing else that is said by users trying to help will make sense.
- You should not be setting up new Manager businesses for new accounting years. As I wrote above, Manager is a perpetual system. Read this Guide: https://www.manager.io/guides/7470.
- Starting balances are only entered when migrating to Manager from a prior accounting system. Read these Guides: https://www.manager.io/guides/15718 and https://www.manager.io/guides/11367.
- Moving the starting balance of your checking account to your newly created equity account did nothing to resolve your setup problems. It only hid them in different accounts. If that money was actually in your checking account when you began the business, you need to enter it according to the Guides above. Otherwise, your bank account balance will never be correct.
Thank you for your support!