What is opening balance? (2024)

FAQs

What is opening balance? ›

An opening balance is the amount in an account at the start of an accounting period. You might hear it referred to as the amount 'brought forward' (BF) from the previous period. It can apply to bank accounts or your financial records. Unfortunately, opening balances can be debit amounts, as well as credits.

Opening balance can be a liability or asset. If you are entering money customer has paid in advance, then it's liability. If you are entering unpaid sales invoices, then it's asset.

3 Opening Balance: The amount you needed to pay for the last bill. Payment Received: The amount you paid for the last bill. Payment Adjustment: The amount we adjust manually. Balance Carried Forward: Balance carried forward is the remaining you pay less or pay more from the previous bill.

An example of an opening balance

During the first year of business, which James designated as the accounting period, the business took in £30,000 from customers and ran up £10,000 in expenses. At the end of the year the following calculation was made: £20,000 plus £30,000 minus £10,000 equals £40,000.

The opening balance is calculated by taking the amount of cash present on the first day of the month and adding any total income minus total expenses from the previous period.

If you want to pay off your entire credit card debt for the month, the closing balance is the amount you'll need to pay. If you pay this amount by the due date, or if your statement displays an interest-free days payment, you won't be charged any interest on your purchases.

The opening balance is the amount of funds in a company's account at the beginning of a new financial period. It's the first entry in the accounts, either when a company is first starting up its accounts or after a year-end.

What does negative opening balance mean? A negative balance is mostly seen in a checking account when a business has a negative balance. The negative balance occurs due to issuing checks for significant amounts of cash, that exceed the amount in the checking account.

Your statement balance typically shows what you owe on your credit card at the end of your last billing cycle. Your current balance, however, will typically reflect the total amount that you owe at any given moment.

An opening balance can either be a debit or credit. If it's an asset then opening balance is debit. If it's a liability then opening balance is credit.

What does opening balance mean on a bank statement? ›

An opening balance is the amount in an account at the start of an accounting period. You might hear it referred to as the amount 'brought forward' (BF) from the previous period.

The open invoice definition is synonymous with that of an outstanding invoice. In other words, it's an invoice that's been sent through to a customer but has not yet been paid. As with any invoice, it's a document showing the amount owed, a breakdown of services or products provided, and the payment due date.

The opening balance consists of the assets, capital & liabilities of the company that is being brought from the previous year's Balance sheet.

The opening balance is the first entry in a firm's accounts, either when they are first starting up or at the start of a new financial year. The opening balance can be found on the credit or debit side of the ledger, depending on whether or not the firm has a postive or negative balance.

An opening balance is the amount of money a business has available at the start of a specific accounting period. This period could be a day, a week, a month, a quarter or a year, depending on how the business manages its finances.

Quite simply, the opening balance of an account is the amount of money, negative or positive, in your account at the start of the accounting period. The overwhelming majority of the time, this will be the amount of the closing balance from the previous period brought forward.