How do I enter Beginning Balances in my Chart of Accounts?
Chart of Account (General Ledger) Beginning Balances
If you are just starting out with your company and have not posted any transactions, Peachtree Accounting assumes that you are entering beginning balances for your accounts when you select the Beginning Balances button. If you have posted transactions, Peachtree Accounting assumes that you are entering adjustments to your accounts for a period in a prior year. If you enter a new account, Peachtree Accounting assumes that this account has a zero balance. You may find it easier to add all necessary accounts and then create one cumulative beginning balance entry.
You will need to gather beginning balances as of the conversion date you decide on. The conversion date is typically the last day of your previous fiscal year (for example, Dec. 31, 2002). The procedures are slightly different depending on the release of software you have.
If you have not posted any transactions in your company:
- From the Maintain menu, select Chart of Accounts, and click the Beginning Balances button.
- Select the period in which you wish to enter beginning balances. Click Ok.
You can select from previous, current, or future periods.
- The Chart of Accounts Beginning Balances window displays. Click or Tab to any of the white cells in the grid to add an amount. (The gray cells are for viewing only.)
- Enter all the beginning balances for the accounts. Scroll the list box to make sure the account amounts are correct. If necessary, you can enter a negative amount; just type a minus sign before the number. An example of when you would use a negative amount would be for a contra-account balance. Note that for each period, a running beginning balance is kept. Thus, if you change an amount in Period 1, the amounts for subsequent periods are also changed. However, if you change an amount in Period 2, the same account balance in Period 1 is unchanged.
- Select the OK icon to post/save the transaction.
If you have posted transactions in your company and you need to enter Beginning Balances prior to your current fiscal year.
- From the Maintain menu, select Chart of Accounts and click the Beginning Balances button.
- Select a Period to Enter Prior Year Adjustments. Click OK.
You can select a period from the previous year.
- The Chart of Accounts Beginning Balances window displays. Click or Tab to any of the white cells in the grid to add an amount. (The gray cells are for viewing only.)
- Enter all the beginning balances for the accounts. Scroll the list box to make sure the account amounts are correct. If necessary, you can enter a negative amount; just type a minus sign before the number. An example of when you would use a negative amount would be for a contra-account balance. Note that for each period, a running beginning balance is kept. Thus, if you change an amount in Period 1, the amounts for subsequent periods are also changed. However, if you change an amount in Period 2, the same account balance in Period 1 is unchanged.
- Select the OK icon to post/save the transaction.
If you have posted transactions in your company and you need to enter Beginning Balances for the current fiscal year:
- Go to Tasks, General Journal Entry.
- Enter the date on which you would like your Beginning Balances posted.
- Enter the General Ledger Account and the balance in the corresponding Debit or Credit column.
Repeat this process for each of the accounts.
- Post/Save the transaction.
IMPORTANT FOR ALL PEACHTREE USERS: To save your beginning balances in your Chart of Accounts, the Net Balance shown at the bottom of the window must equal zero. If the Net Balance is not zero, it will give you an error message "Trial Balance must be zero (0.0) to save beginning balance transactions." when you attempt to save. This is because Peachtree adheres to double entry accounting standards. According to the Generally Accepted Accounting Principles (GAAP), each entry to an account is offset by an entry to another account. For example, to enter a beginning balance for your checking account, you would enter a positive amount in that account. In most instances, to offset this amount, you would generally enter a negative amount in an equity account such as a capital or a retained earnings account. If you are unsure about which account offsets (or balances) another, you should consult your accountant or refer to the Accounting Primer booklet that is included with your Peachtree product.
What if my beginning balances don't balance?If you are out of balance, a message will display warning you that an equity account will be created (or updated) to offset the difference or out-of-balance amount.
This account will be named Beginning Balance Equity, and its type is Equity- Doesn't Close. This account does not appear in the Beginning Balances window, but it will appear in the list of accounts, and on financial statements and general ledger reports.
Try to find the reason for the out-of-balance situation, and correct it if possible (select Cancel when the warning message displays). If you are entering beginning balances from financial statements supplied by your previous accounting system or by your accountant, you most likely made an error in data entry. Make sure you didn't leave out an account or balance, and that you entered all amounts correctly.
If you still cannot find the error, you can select OK at the warning message. Your books will be in balance, and you can proceed with setting up your company. You can even begin entering and posting transactions. (Remember that once you post transactions, you will need to enter Prior Period Adjustments rather than Beginning Balances. Although both are entered using the Beginning Balances button, Peachtree Accounting will display the proper window according to whether the transaction has been posted or not.) Then later, if you find the cause of the out-of-balance situation, you can go back to the Beginning Balances or Prior Period Adjustments window and correct the situation. Once the Beginning Balance Equity account has no transactions associated with it you can mark the account as inactive. You may be able to purge the account at a later date.
Customer, Vendor, Employee and Inventory Beginning BalancesYour customer, vendor, item, and employee beginning balances need to total the amount shown in general ledger. (In other words, if you are using the Accrual accounting method, the Accounts Receivable total in General Ledger must match the total of outstanding invoices in Customer beginning balances; likewise, the Accounts Payable total in General Ledger must equal all outstanding bills.) The beginning balances for customers and vendors do not automatically update the general ledger beginning balances, so you must check to ensure they match.
For example, if you enter $12,500.00 as the total amount you enter for customers' beginning balances then the total of all your Accounts Receivable GL accounts must be $12,500.00.
Beginning Balances for Customers or VendorsYou can enter beginning balances for customers/vendors at any time. Customer/Vendor beginning balances are comprised of outstanding invoices. You can enter the numbers of the actual invoices you sent to the customer or you received from your vendor, respectively.
If a payment has been made or received in Peachtree against a beginning balance invoice it will display as gray and be disabled.
The customer and vendor beginning balances must not include any transactions (such as Sales or Purchases) that you have already entered in the task screens, such as the Sales/Invoicing or Purchase/Receive Inventory screens of Peachtree Accounting. These beginning balances amounts are neither transferred to your A/R nor you're A/P account in General Ledger. Be sure that the total amount of your Customer Beginning Balances is equal to the amount you entered as a beginning balance in your Chart of Accounts for your A/R accounts. Likewise, be certain that the total amount of your Vendor Beginning Balances is equal to the amount you have entered for the Accounts Payable account beginning balance in the Chart of Accounts Beginning Balances window.
You are able to reference all of your customers' or vendors' current balances at a glance. After you look at the current balance, you can enter beginning balance information for a customer using the "Invoices for:" tab in the beginning balances window.
Note: Enter the accounts receivable account in the A/R Account field if you are using the accrual method. If you are using the cash basis method you cannot enter an A/R Account. The same holds true for the accounts payable account in the A/P Account field for Vendor Balances: enter the A/P account if you are using the accrual method. You will not be able to enter this account if you are operating on a cash basis accounting method. Press ENTER to move to the next line where you can enter another invoice.
Beginning Balances for EmployeesEntering your employee beginning balances ensures that your monthly, quarterly, or year-end reports will print correctly.
You can enter a beginning balance for each new employee and edit it at any time; they will not affect the General Ledger.
It is advisable to enter employees' beginning balances before any payroll entries.
You can select employees who have had no transactions posted by using the Lookup button at the side of the entry box.
The date fields along the top of the window are the dates of the pay periods for which you'd like to see the history on the employee. Since you probably won't be starting Peachtree Accounting at the beginning of the year, here are some suggestions on how to enter information to get the correct quarterly and year-end reporting of the employee's earnings.
As an example, let's say you want to use Peachtree Accounting at the beginning of the 4th quarter:
If you used a different accounting program and have already printed out reports and statements for previous periods, enter the balance for each field into one period, such as Jan. 1 to Sept. 30. Then enter any pay periods that came after the start of the quarter to ensure your payroll reports will be correct. As an alternative, you can enter the first three-quarters as three separate pay periods or you can enter every separate pay period from January to September.
Enter the amount for each EmployEE Payroll field. You define the Payroll fields under the EmployEE tabs in Employee Defaults. Enter all deductions as negative amounts, and earnings as positive amounts.
Note: You can use the horizontal scroll bar at the bottom of the period box to view your periods. Select the scroll button and drag it until you see the period you want. You can also press the right or left arrow key to move one period at a time right or left.
Select the Save icon when you have finished entering your employees' beginning balances.
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