Book-Keeping and Accountancy · Ch 3 — Journal
Opening Entry
Opening Entry
A business that has been running for more than one accounting year does not start each new year with a blank slate — it carries forward the closing balances of its assets, liabilities and capital from the previous year. The very first entry passed in the new year's journal, recording these brought-forward balances, is the Opening Entry.
Opening Entry
The entry passed at the beginning of a new accounting year to record the balances of assets, liabilities and capital brought forward from the previous year's Balance Sheet.
In an opening entry, all asset accounts are debited (since assets are Real accounts coming into the new year's books) and all liability accounts, together with the Capital account, are credited (since liabilities and capital are Personal accounts, and it is the business that "owes" both these outsiders and its own owner). Where the figure of Capital itself is not directly given, it is found as the balancing figure:
(This relationship — the Accounting Equation — is itself common ground taught across every accounting syllabus, not something unique to any one book.)
Worked illustration. On 1st April 2024, Mr. Anil's books showed the following closing balances as on 31st March 2024: Cash ₹25,000; Bank ₹40,000; Stock ₹30,000; Furniture ₹15,000; Prakash (a debtor) ₹10,000; Suresh (a creditor) ₹8,000; Bank Loan ₹20,000. Pass the opening entry.
Total Assets = 25,000 + 40,000 + 30,000 + 15,000 + 10,000 = ₹1,20,000
Total Liabilities = 8,000 + 20,000 = ₹28,000
Capital = 1,20,000 − 28,000 = ₹92,000
| Date | Particulars | L.F. | Debit (₹) | Credit (₹) |
|---|---|---:|---:|---:| …
The entry passed at the start of a new accounting year to bring forward the balances of assets, liabilities and capital from the previous year's Balance Sheet; all assets are debited, all lia …