Opening Balances

Overview

Opening balances are mainly used to record the starting balances of accounts for different modules of Mezan if the organization has been running before using Mezan as it's accounting solution.

Types of Opening Balances

There are 5 types of opening balances in Mezan:

  1. Opening Balance for New Organization Setup: This is initiated as a manual journal entry, but assigns a special flag if created from the opening balances section in the accounting module. This is used to record the starting balances of the organization's accounts for the first time using Mezan as it's accounting solution. There are two main use cases for this:
    1. Fresh Organization: If the organization is a recently created organization, this is usually used to record the equity deposit from the founders or shareholders into a cash account of the company, to represent the capital investment in the company.
    2. Organizations moving to Mezan from other Solutions: If the organization is moving from another accounting solution to Mezan, this is used to record the starting balances of the organization's accounts, so you can initiate your operations on Mezan with the closing balances from the previous solution.
  2. Roll Over to Following Year: This is initiated as a manual journal entry, but assigns a special flag if created from the opening balances section in the accounting module. This will automatically create a new opening balance for the new year with the same closing balances of the balance sheet in the previous year as the current year. This will also calculate the retained earnings or losses and prompt you to select the correct account, which is usually an equity account. This is necessary for financial reporting purposes to ensure the financial statements are continuous and accurate. Reports in Mezan such as the balance sheet, income statement, trial balance, and account statements rely on this usually as Mezan expects you to rollover your balances for them to function as expected.
  3. Customers Opening Balances: This is used to record the starting balances of the organization's customers for the first time using Mezan as it's accounting solution. It's usually better to record customers opening balances here instead of the regular opening balances section, as this is included in the customer statements reports which are usually focused exclusively on the sales module operations.
  4. Vendors Opening Balances: This is used to record the starting balances of the organization's vendors for the first time using Mezan as it's accounting solution. It's usually better to record vendors opening balances here instead of the regular opening balances section, as this is included in the vendor statements reports which are usually focused exclusively on the purchasing module operations.
  5. Inventory Opening Balances: This is initiated as an inventory stocktake, but assigns a special flag if created from the opening balances section in the accounting module. This is used to record the starting balances of the organization's inventory for the first time using Mezan as it's accounting solution, incase it has existing inventory in the organization.

Keep in mind, all opening balances generate transactions on the general ledger, but can be initiated as a manual journal entry, standalone transaction types, or as a stocktake. If you intend to use the opening balances for customers, vendors, or inventory, it's expected that you exclude those balances from the regular opening balance journal, to avoid double counting the balances in the general ledger.