 QuickBooks Online 2022, adjust opening balances. Get ready because it's go time with QuickBooks Online 2022. Here we are in our GitGray Guitars practice file that we set up with the 30 day free trial holding control, scrolling up just a bit to get to that one, two, five percent. We're currently in the homepage, otherwise known as the Git Things Done page and the business view as opposed to the accounting view. If you wanted to change to the accounting view, it's something you can do by going to the cog up top and going to the accounting view on down below. We will be switching to the accounting view so we can get a look at how to navigate in the two areas either by switching here or by jumping over to the sample company file to get a feel for where things are located in the accounting view. Jumping back on over, we're gonna now be looking at, let's open up some reports. I'm gonna go to the tab up top, right click on the tab up top and duplicate the tab. Let's do it again two more times. Repeat that process two more times. Right click on the tab up top, duplicate again. Back to the tab to the left, right clicking on it and duplicating it again. Now if you were in the accounting view, you would simply be going to the reports down here to find the reports. We're gonna be finding the reports in the business view here, which is gonna be in the business overview. I'm in the second tab, business overview now. We're gonna start off with our favorite balance sheet reports in the reports area, looking at the balance sheet, which is of course one of our favorites. That's one of our favorite reports. Everybody's favorite report. Everybody loves the balance sheet. I don't know anybody that says they don't like the balance sheet. So I'm gonna say this is gonna go from 010121 to 123121 and run it. And then we're gonna go to the tab to the right. Let's open up the profit and loss over here in the business overview section back down to the reports. Again, the P and the L, the other favorite report that's just universally adored by all mankind and animals too. 010121 to 123121 for the range change, running it. And then we're gonna go to the tab to the right to open the less well-known report down here in the business overview. But it should be more well-known in my opinion because it's an excellent report as well. That's the trial balance. The trial balance, which we'll type in here to pick it up. And then there is the trustee trial balance. Let's close up the hamburger. Do a range change up top, 010121 to 123121. Hold on a second, something happened. 123121, run it. Balance sheet on top of the income statement. No subtotals, nice small short report here for us as opposed to the longer reports on the balance sheet and the income statement with all the subtotals. Back to the balance sheet. We've been entering our data for the beginning balances imagining that this is gonna be our starting point as of January 1st, 2022. And these are the starting numbers from the prior accounting system as of the end of the last accounting system, which was 123121. We've entered all this data into the system. We double checked that all the numbers are correct. We had a process of entering the beginning balances and entering whatever else needed to be done to get those beginning balances supported by subletters as is appropriate. And we posted everything else to the equity section in some way, shape or form, either through the beginning balance, making it go to opening equity or by entering bills and invoices, which meant the other side went to the income statement rolled into then the equity section in the form of retained earnings. So now we're gonna have this stuff in opening balance equity, specifically. That's not a very professional account. Account basically means, hey, QuickBooks dumped this stuff in there because it didn't have anywhere else to put it or it wasn't sure exactly what the other side should be. So it's kinda telling you that's our reconciling account. Now, the fact that it put it into an equity account is correct, that's where we want it to go. So all we need to do now is adjust this opening balance to where we want it to go, which is going to be the retained earnings account. We also might wanna adjust that retained earnings account to what it should be for our particular company, because it doesn't look like the company files or the GL that's given to us by QuickBooks at this point in time is changing the equity account to be appropriate to whatever kind of business we are in. In other words, if we were a corporation, retained earnings seems appropriate. If we were a sole proprietorship, which we are here, we're assuming, we would call it owner's equity or a capital account. If it was a partnership, you would have multiple capital accounts possibly. Now, the other thing you wanna keep in mind is you can think of equity kind of as a whole, as if it's the same for any type of entity, a corporation, a partnership, a sole proprietorship in that it represents the owner's claims to the assets. Assets minus liabilities, in other words, is equity. That's kind of like the book value of the company that the owners have. Then you need to break out the equity in alignment with who the owners are. If it's a sole proprietorship, you can do that with one equity account and then possibly a draws or an investment account for that one particular owner. If it's a partnership, then you gotta break out the equity account and be mindful of the fact that you're gonna have to track the fact that multiple owners have claims to the equity and that's gonna be important as well. If it then is a corporation, it's actually a little bit easier than a partnership, generally, because then you just dump everything into retained earnings and the thing that's basically going to be deciding who has what is the fact that they have equal shares and shares represent an equal number of units of ownership and therefore that will be a little bit easier than partnerships which can actually be a little bit confusing because you can have different terms of the partnerships and how they're gonna split income and draw stuff out and that kind of stuff. But whatever the issue is then, we get our total equity to be correct and then we can just do some journal entries to put it into the proper account and we're always gonna have this opening balance equity which we're gonna have to remove the money from and put it into the proper account here. Also note that the net income number is something that we don't naturally see on a balance sheet but when we're talking about the balance sheet here, QuickBooks puts it into this account because that kind of gives us a link of the income statement. It kind of helps us to know that the income statement ties into the balance sheet so we can see that amount over here on the income statement as well. Now the income statement, I want to be zero for this company file and just start with our balance sheet numbers so that we can have the performance numbers that we're gonna put in the system. But we have the cutoff as of January 1st, 2022. So I don't really care that the stuff is in the income statement in the prior year as long as in the current period that we think of as the cutoff, it starts at zero, which it should. So if we change this whole thing to our starting point which is gonna be 010122, let's say to like 123122 and run it which you can't see the run but the runs right there, then there's nothing in it. That's what we want on the income statement. If I do that on the balance sheet, then this net income number will roll into retained earnings, which is what we want. So let's go back up top and just change that. I'm just gonna change this one from 010122 to 010122 just for that day now. So we just went one day, balance sheet is as of a point in time, same numbers here except that the equity section now rolled in that net income into retained earnings. So now we're left with only this opening balance equity which isn't quite right. If I take a look at that on the balance sheet side of things, I mean on the trial balance side of things, the trial balance shows the balance sheet on top of the income statement. So I've got these income statement numbers down here and retained earnings that the income rolls into. I'm gonna do the same thing and these two numbers will go away and they will roll into the retained earnings accounts. Let's do that here. So I'm gonna bring it up a day. So 010122 to 010122. That's our starting point. Let's run it. And so now we just have the balance sheet accounts just like we have over here except that we've got this opening balance equity with something in it and I want to zero it out to get it to here. So the best way to do that is a journal entry. So we're gonna do a journal entry and just close this opening balance out. It's gonna be quite simple. We can go to the first tab to do it. The first thought is you can say, okay, I'm gonna do a journal entry. Let's hit the plus button up top and go to the journal entry. You can do that, but because there's only two accounts affected, you could just go to the register, which might even be easier because you could see the balance that's in it. The register is found in the bookkeeping system. If you were in the accounting view, you would be in the accounting down below, which I think is better. I got a little upset at the business view last time, which was a little over upset with it, but it was kind of restrictive in adding accounts there. So I don't really like that. But again, some of the icons are kind of nice. And again, they're gonna A, B test it so we'll see what they do with it in the future. But in any case, I still like the accounting view better, like way better. But in any case, my opinion is irrelevant. So I'm gonna go down here and close up the hamburger. And we're gonna say that, let's go down to the opening balance equity, opening balance equity account, which is gonna be in the equity section. So here we have it. And so there it is. Let's go into the register now and just zero that thing out with a register entry. And so then I'm gonna hit the dropdown and say we wanna do a journal entry. That's one of the only kind of things we have in here because it's an equity type of account. And let's do this as of 1231 and we'll say this is a beginning balance or what do they call it? Opening balance, beginning balance, but they named everything opening balance. So we'll do that. And then this has a credit in it. So I would say, I would think we need an increase to make it go to zero, 2604. And that's why this register is nice because I don't have to jump back over to the income statement to see the number. I see it right there. I need to make it zero. So I'm just gonna do the opposite thing to it. And then the other side is gonna go to the retained earnings, which you could find in the dropdown, but it's not in order because they put the expenses first, which is another thing. I don't really like that because I'd rather it be in order, but I can see why they would want the expenses because that's the most likely thing that would be going here. But I'm gonna type in retained earnings. Retained earnings. And then I'm going to save this. Let's save it. And then there it is a zeroed it back out. So that looks good. Let's go back to our reports. Let's go to the balance sheet. Balancing of the sheet. Let's refresh the report running it. We only work with fresh stuff here. Don't work with old reports. Don't work with old reports. That's what I say. That's my motto. I don't work with old reports. So then the opening balance here it is. It's down to zero. There's the 77, 896. It looks like the precise thing that we tried to do has actually been done. 77, 896. How ironic. Let's go. If we go into the opening balance equity, then we see it's back to zero at least. Oh, I can see the detail up here by going to 010121. I was like, where's the detail? Does it have something to do with the business view, not showing me the details or something? We're not showing you the, okay. So it's gonna be in here. So here's the journal entry and bringing it back down to zero. So let's go back up top and let's go back to the report summary. And so there we have it. And so now I can't drill down on the retained earnings. So if you want to do that, which I do, let's go into a GL report. So I'm gonna go to the last tab, right click on it and duplicate it and let's go into a GL report, otherwise known as a general ledger. We do that by going to the bookkeeping on the right, on the, actually no, I'm going into the bank business overview and then we're going into the reports. And let's type in a good old general ledger, the good old GL, as it's sometimes referred to, because that's the first names, first two letters of the name of the report. Let's do a range change up top from 0101212123121 and run it, run it. I was running, because Jenai told me to. I did just what you said, Jenai. So here it is. We've got then the journal entry retained earnings. Right there, there's the activity for it. So that's nice. We can also see on the trial balance, if I go to the trial balance, that if we change this up and run it again, there it is, there it is here as well. Now, let's just do our last double check to our beginning balances over here. Double check, double check. That's the only check. Sometimes I triple check, but that's too much. Two checks and that's it. That's all you do. Otherwise, you're wasting too much time. There's the 25,000, 20,000, two, eight, nine, six, seven, five, the 75,000, the 15,000, the 1,000, the 22,000, and there's the 77, eight, nine, six, and retained earnings. One last thing, let's change the retained earnings to owner's equity here. So it's more like a sole proprietorship. We'll see if we can do that by going to the first tab. I'm gonna go back then. And I'm in the business view. So this again, I'm in the business view. So when I go into changing this, this way to look different than in the accounting view, I feel like it's way more restricted in here. But note, and again, you don't relate all these equity accounts seems a little excessive too as well, federal estimated taxes, equity, owner's draw, owner's investment, personal expenses. So they're basically saying, hey, if you got personal, like they're trying to point people to say that if you got the personal expenses and stuff, you should use the equity account. But again, I think they're kind of getting a little overboard on it. But in any case, let's go down to the retained earnings. And let's see what, if I go to the edit, this one to change the name, you can see how much more restrictive you have to do but I can't change the name, owner's equity. So we'll call it that and then I'll save it and then I'll just change it to the accounting view just so you can see the difference. This is one of the major differences in terms of adding accounts on the look and feel. So if I say, if I go up top to the cog and so let's switch it to the accounting view where I have a little bit more control, just a little bit more control and a bit more professional language in terms of the names here. Let's check it out. So now we'd be in the accounting tab and then I could scroll down and say, okay, if I was to look at this stuff in the equity section, all these equity accounts. And then if you don't use all these equity accounts, you could after a couple, you know, go back in there and remove the ones that are not being used at some point. But we changed this one to owner's equity. So there it is. So if you were to edit it in this view, you see, you see, I've got a whole different kind of edit screen here. And then you could change this to owner's equity. That looks good. Let's go ahead and save it. And I'm okay with that. So I'm gonna say yes and save it. You cannot change the detail type of retained earnings. Okay. So let's change it back to retained earnings and then save it. And so the retained earnings is a bit special of account or the equity account that they're using to roll in the income statement accounts, which could be called retained earnings generally for a corporation is gonna be a little bit a little bit of a special account because the system's gonna be rolling the income statement accounts into it, in essence, closing out the accounts to it. So if I go back on over to the balance sheet and run it again and scroll down to the equity section, then now we're calling it owner's equity, which might look more like a sole proprietorship. And these little changes don't really make a lot of difference. It's just a difference in a terminology. But they can make things a little bit more professional if you're dealing with a sole proprietorship, then some of your customers may not care, your clients may not care or they may say, hey, yeah, that looks more professional to me. Same with just the name, I'll say the profit and loss or something. Some people might prefer the income statement. If you change it, not a big deal, it's just a name, but it just depends on how you want to be presenting certain things. And in general, the fact that something says owner's equity will be more straightforward as well when you're working with accountants and the bank or something like that, because if you see retained earnings, you're typically going to be thinking a corporation generally, if you're not familiar with the company type.