How to Empty the QuickBooks Opening Bal Equity Account
Sigh! We receive many e-mails daily from users who don't know what the balance in the Opening Bal Equity account represents. Most of the e-mail includes the information that an accountant told them it would take time (which means money) to clear the account, or the accountant asked them what the account is for (accountants who aren't familiar with QuickBooks).
Amounts are posted to this QuickBooks account when you enter data into the Opening Balance field when you're setting up a new account in your chart of accounts (a balance sheet account) or you're setting up a new inventory item and fill in the fields for current quantity on hand and the value of that quantity.
To clean out this account you have to remember every transaction that went into that opening balance amount you entered when you set up the new account or inventory item. The number of QuickBooks users who can track that information is miniscule.
Never ever use those opening balance fields when you're setting up a new QuickBooks company file. Use real transactions. For complete instructions, see Chapter 1 of our book "Running QuickBooks 2012 Premier Editions".
Hopefully, someday Intuit will listen to all the accountants and third-party book/article authors who understand how opening balances should be entered if you care about good accounting, and they'll get rid of the opening balance fields in QuickBooks.
We heard a great definition of the Opening Bal Equity account from a CPA named Phoebe Roberts: "Don't set up any beginning balances (because the offset to each would be a garbage non-account called 'Opening Bal Equity,'which in my opinion ought to be called 'QuickBooks lacks an understanding of basic accounting principles')". It made all of us here laugh out loud.