Opening Balance – the amount that is in the account at the beginning of an accounting period
To remember what Opening Balance means use the following mnemonic:
The opening act balanced (opening balance) on a beam while checking the amount in her bank account.
In business, an opening balance is the amount of money in a business’ bank account at the start of an accounting period. This is usually a financial quarter, but could also be a month or year.
A business’ opening balance will be the same as their closing balance from the end of the previous accounting period. The opening balance is important for a business to know how it stands financially going into the new accounting period.
If a company’s opening balance is £20,000 but had sales of £50,000 and total costs for the month of £80,000, then that would leave the closing balance of the accounting period at minus £10,000 which would mean something needs to change.