Balance Sheet account

A Balance Sheet account records something the business owns, owes or has raised from its owners: bank balances, stock, customer dues, supplier bills, VAT owed, share capital. These balances do not belong to any one year; what you hold on the last day of Ashadh is exactly what you hold on the first day of Shrawan. That is why the Period Closing Voucher leaves them alone and why their ledger shows a running balance across years. These accounts are what the bank reads for a loan and what the IRD examines for unpaid VAT and TDS. Posting an expense into a Balance Sheet account hides it from profit, which overstates tax and misleads the owner.

Closing balance of year N = Opening balance of year N + 1; nothing is reset at year end.

1. 01Go to Accounts Setup > Chart of Accounts and open an account such as Debtors.
2. 02Read Report Type: Balance Sheet. It follows from the root type and cannot be changed.
3. 03Open Financial Reports > Balance Sheet, set the fiscal year and read the closing figures.
4. 04Change the fiscal year to the next one; the same figures appear as opening balances.
5. 05Open Financial Reports > General Ledger for the account to trace how the balance built up.

Balances here never reset. The Period Closing Voucher leaves them alone.

Cash and bank Rs 25,68,160 at Ashadh end become the opening balances on Shrawan 1.