How to write the opening entries of a new business
A new set of books starts with one journal: what the business has, what it owes, and the owner's capital as the balancing figure.
In this room: 3 tasks, 9 questions
- What the business starts with3 questions
- Writing the opening journal4 questions
- Capital brought in later2 questions
The first entry in a new set of books lists everything the business has and everything it owes on day one.
| Item | Amount |
|---|---|
| Money in the business bank account | 6,000.00 |
| Van | 4,500.00 |
| Inventory of parts | 1,500.00 |
| Start-up loan, still to be repaid | 3,000.00 |
Capital is what the business owes its owner. It is the balancing figure: total assets less total liabilities.
Answer the questions below
2 more questions follow in this task.
Every asset is debited. Every liability is credited. Capital is credited.
The narrative is short, such as: Opening entries of Marlow Cycles at 1 May.
If the two columns do not agree, the capital figure has been worked out wrongly.
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3 more questions follow in this task.
An owner can bring in more than money. When Dev gives the business something he owns, the asset is debited and Capital is credited.
On 9 May Dev brings his own laptop into the business. It is worth £600. No money moves, so the cash book is not used.
Answer the questions below
1 more question follows in this task.