After you close your books for your accounting fiscal year, if you record carryover cash as an income account, you will need to create an opening balance adjustment.
Asset & Liability Accounts – these accounts will carryover each year. You should not be entering an opening balance adjustment for any asset or liability account.
Example:
At the end of your fiscal year you had $25,000 as your book balance for your checking account. Included in the $25,000 balance is $5,000 that was collected in advance for a designated project.
In your Budget, you are going to include an Income Account for your designated project and you record your opening balance of funds in your Budget as an Income Account. You will create the following journal entries:
Step 1: Create a Starting Balance for Your Carryover Income Amount
The starting balance for your carryover line item (income) will be $20,000.
- Go to the Accounting/Accounts tab.
- Select the "enter an opening balance” button.
- Choose the proper account (Income Account for Carryover)
- Enter the date – July 1
- Enter $20,000 for your starting balance.
Step 2: Create a Starting Balance for Your Designated Project
The starting balance for your Designated Project Income will be $5,000.
- Go to the Accounting/Accounts tab.
- Select the "enter an opening balance” button.
- Choose the proper account (Income Account for Carryover)
- Enter the date – July 1
- Enter $5,000 for your starting balance.