Entering Opening Balances & Items

Procedure for companies to move to NEOSYS accounting system

STEPS DO NOT NEED TO BE CARRIED OUT IN ORDER

1. Create an Opening Balance journal for all A/c's in the Balance Sheet (as in their old accounting system ended for a period), but post any Control A/c balance into a Suspense A/c (ZZZ999) instead. This way the Balance sheet will balance.
2. For each Balance Forward ledger, create an Opening Balance journal where the contra closing entry (which represents the balance of the ledger) will be the Suspense A/c (ZZZ999) Eg. Bank Ledger, Cash Ledger (not Clients & Suppliers as they are open item ledgers)
3. Enter Outstanding items as follows:
   • Enter 1 Batch of Outstanding invoices in the Invoices Journal per account (either Client or Supplier) with many outstanding items / invoices and as you post it with the contra a/c as the Suspense A/c (ZZZ999). You make sure the balance / batch totals match the balance of the A/c. Eg. Client XYZ balance is 100,000 AED and the batch total should be 100,000 AED.
   • Enter 1 Batch of outstanding invoices in the Invoices Journal for all the smaller/remaining a/c's with relatively few items.
   • Enter batches of receipts and/or payments for any unallocated payments and receipts.

Opening items - date as per the invoice/original but the period equals previous last period (eg. if you are starting the new financial year on 1/2008, then the period will be 12/2007). This is done so that invoices dont show as movements in the current financial periods and show as Opening items.

Opening balances - in current period, date does not matter as these show as movements anyways.

It is not impossible to enter the Opening Balances on Opening Items and here the date matters.

Posting of foreign currency items and accounts

Accountants should give foreign currency and base currency statements. Sometimes accountants give the Balance sheet in base currency which is at a particular exchange rate, but the accounts in subsidiary ledgers show in foreign currency (eg clients) and the exchange rate is only know to them. Hence this causes a problem as NEOSYS might value at its own rates and the control a/c will not tally with the subsidiary ledger. Every account in the subsidiary ledgers should total up and match the Control A/c in the GL.

What are Opening Balances?

Opening Balances are the balance of accounts at the start of an accounting period. When we have new clients moving from their existing accounting system to the NEOSYS accounting system, they need to enter Opening Balances of various heads of the General Ledger which are actually the Closing Balances of the previous accounting system.

For subsequent years, NEOSYS automatically carries the closing balances forward to become the opening balances of the following years - except for P&L accounts which are closed to the Retained Earning account.

How to enter Opening Balances

To enter the Opening Balances, go to Finance > Journal > Journal Entry and select the Opening Balances Journal and follow the below:

1. Enter period 1 and the year that you are interested in. Putting any other period but 1 makes no difference since NEOSYS always puts them in period 1.
2. Put date 1/1 of the same year. Since opening balances DONT show as entries on the account it doesnt matter what you put here.
3. Enter all the account numbers for one ledger (eg bank accounts) into one batch/journal voucher, putting a - (negative sign) for credit balances.
4. The last line of the journal voucher "closes" the balance of the journal to the Suspense Account which usually is ZZZ999 or 999. You can check that the last line agrees with the total balance of the ledger before posting to ensure that no mistakes have been made.
5. Repeat the above steps for each ledger that has to be opened.

There are some special considerations for posting the opening balances of the General Ledger:

1. Replace the a/c number of any control a/c with that of the Suspense Account. NEOSYS will not allow you to post the control a/c balances directly because the control a/c balance will be posted automatically from the postings to the accounts in its subsidiary ledger.
2. There is no closing line since the total of the General Ledger A/c is zero if it properly balances.

(the following image needs correcting to show the period and date as per notes above)

What are Opening Items?

When companies move to any new accounting system (referred to as NEOSYS), they usually prefer to enter the outstanding (unpoad) items of the Trade Creditors & Trade Debtors, rather than entering opening balances. Opening items are unpaid invoices and perhaps a few unallocated receipts or payments.

Opening items is a NEOSYS term that corresponds to the "opening balances" of open items accounts in normal financial terminology.

How to enter Opening Items?

To enter the Opening Items, go to Finance > Journal > Journal Entry and select the respective Journal i.e. to enter Client opening items select Media Invoices/Invoices or for Supplier opening items select Purchase Invoices/Media Purchase Invoices and follow the below:

1. Enter any period prior to the new first period so they show as opening items in the first period.
2. Put any date as of the previous year.
3. Enter each invoice details i.e. the invoice number
4. Select the Client/Supplier account
5. Enter the invoice amount
6. The contra account must be the suspense account which usually is ZZZ999 or 999.
7. Is it advisable to stop and post the batch once per large account because you can then check that the batch total agrees with the balance of the account to prevent mistakes before posting.