Setting Up Opening Balances
Welcome to Kezi! One of the most critical steps in starting with a new accounting system is migrating your existing financial data. This tutorial walks you through the process of setting up your Opening Balances—the financial snapshot of your business on the day you switch to Kezi.
The Story: Ahmed's Furniture Shop
Ahmed has been running a furniture shop for three years, keeping his records in a spreadsheet. Today, he’s moving to Kezi. His spreadsheet shows:
- Cash in Bank: $15,000
- Inventory: $25,000 (stock of chairs and tables)
- Owed by Customers: $5,000
- Owed to Suppliers: $3,000
- Initial Capital: $42,000
Ahmed wants to ensure his "Day 1" in Kezi matches his "Last Day" in Excel.
Prerequisites
Before we start, ensure you have:
- Created your Chart of Accounts (e.g., Bank, Inventory, Accounts Payable).
- Set your Fiscal Year start date.
- Gathered your closing Trial Balance from your old system.
Step 1: Create the Opening Journal Entry
In Kezi, we use a Manual Journal Entry to record the starting point.
- Navigate to Accounting > Journal Entries.
- Click Create New.
- Set the Date to the day before your official start date in Kezi (e.g., Dec 31st if you start on Jan 1st).
- Set the Reference to
Opening Balances 2024.
Step 2: Record Assets (Debits)
Assets are what you own. In accounting, these have a Debit balance.
Ahmed enters his assets:
- Bank Account: Debit $15,000
- Inventory Account: Debit $25,000
- Accounts Receivable: Debit $5,000
Step 3: Record Liabilities and Equity (Credits)
Liabilities (what you owe) and Equity (owner's stake) have a Credit balance.
Ahmed enters his credits:
- Accounts Payable: Credit $3,000
- Owner's Capital: Credit $42,000
Step 4: Balance the Entry
A fundamental rule of double-entry accounting is that Debits must equal Credits.
| Account | Debit | Credit |
|---|---|---|
| Bank | $15,000 | |
| Inventory | $25,000 | |
| Accounts Receivable | $5,000 | |
| Accounts Payable | $3,000 | |
| Owner's Capital | $42,000 | |
| Total | $45,000 | $45,000 |
Kezi will show a green checkmark indicating the entry is balanced. Click Post.
Step 5: Verify the Trial Balance
Now that the entry is posted, let's check the result.
- Navigate to Accounting > Reports > Trial Balance.
- Select your start date.
- Verify that every account matches your spreadsheet.
Summary
You have successfully migrated your business's "financial health" into Kezi! All future transactions—sales, purchases, and expenses—will now build upon this accurate foundation.