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To determine the scope of a bookkeeping clean-up engagement, you are reviewing the Client Overview tab for a potential client. You notice that there is a large amount in the Opening Balance Equity account.
Which 3 reasons could be causing this balance?
A. The client added transactions in the Banking Center without assigning an account to them
B. Opening balance for an inventory item was entered during the setup process
C. The client entered an Opening Balance when creating an Other Current Asset account
D. Opening balances were included when importing customers using the Import data tool
E. The client forced a bank reconciliation when the difference was not zero

Respuesta :

Answer: B. Opening balance for an inventory item was entered during the setup process.

D. Opening balances were included when importing customers using the Import data tool.

E. The client forced a bank reconciliation when the difference was not zero.

Explanation:

The reasons that can be attributed to the large amount in the Opening Balance Equity account will be:

• Opening balance for an inventory item was entered during the setup process.

• Opening balances were included when importing customers using the Import data tool.

• The client forced a bank reconciliation when the difference was not zero.

Martebi

The 3 reasons could be causing this balance is that:

  • The client has added transactions in the Banking Center without assigning an account to them.

  • The Opening balances for one or more Product/Service items were entered during the setup process.

  • Opening Balances were included when importing Customers, using the Import Data tool.

The Opening Balance Equity account value most times is often equal to the prior year Retained Earnings.

if a balance in the Opening Balance Equity account does exists and if the balance is equal to the prior year’s Retained Earnings, the Opening Balance Equity may be closed into Retained Earnings.

Conclusively, if a balance remains on the Balance Sheet for Opening Balance Equity, it is advisable to review the individual transactions.

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