Glossary
What is an opening balance?
What opening balances are, where they come from when you switch software, and how one journal brings them in with the books balanced.
Updated
In short
An opening balance is the amount an account holds on the first day of a new set of books. SimpleERP brings them in through a three-step wizard that posts one balanced opening journal.
An opening balance is the amount an account holds on the first day of a set of books, carried in from the closing balance of the old books or a year-end statement. Cash, bank, loans, customer dues, supplier dues, stock and fixed assets all need one when a business switches software. Together they must balance, with the difference going to capital or an opening balance equity account.
Opening balance: a worked example
Lakshmi Steel Furnitures starts its books in SimpleERP on 1 April 2026, with balances as of 31 March 2026 from its Tally trial balance.
| Account | Debit | Credit |
|---|---|---|
| Cash | ₹50,000 | |
| Bank (HDFC) | ₹2,00,000 | |
| Accounts Receivable: Ravi Stores | ₹30,000 | |
| Loans Payable | ₹1,00,000 | |
| Opening Balance Equity | ₹1,80,000 | |
| Total | ₹2,80,000 | ₹2,80,000 |
FAQ
Questions, answered
What date should opening balances use?
The day before your first day in the new books, usually 31 March when you start on 1 April. Use figures from the old books' closing trial balance on that date, and enter each customer's and supplier's due separately so their statements start right.
What is Opening Balance Equity?
An equity account that takes the balancing figure when opening balances are entered, so the opening journal always balances. Once everything is in, its balance is the business's net worth on the opening day. Your CA may later move it to capital.
How do I enter opening stock?
In Inventory, add a stock adjustment with the reason opening stock, giving quantity and unit cost per product and warehouse. It posts Inventory against Opening Balance Equity, and the average cost starts from that figure.
Can I correct an opening balance after posting?
Post a manual journal dated on or after the opening date for the difference, or reverse the opening journal and enter it again while the period is unlocked. The wizard itself can be re-run only while its journal is still a draft.
Related
Keep reading
Closing stock
The value of unsold goods at the end of a period: opening stock plus purchases, less the cost of goods sold.
Read moreCapital account
The owners' stake in a business: what they put in, and for a proprietor, profits added and drawings taken out.
Read moreMoving from Tally or Excel
Import masters, balances and open bills from Tally or Excel, checked first and undoable, then run both systems for a month.
Read more
Run your whole business from one simple place.
Seven days free. No card. Your first GST invoice in minutes.