What is the Opening Balance Equity account sitting on my balance sheet, and how do I clear it?

What the Opening Balance Equity account actually is

Opening Balance Equity is a default QuickBooks Online account that represents the company's starting balance before company assets and liabilities are entered. (jurisdiction: United States, entity_scope: QuickBooks Online company files (small business), platform: QuickBooks Online, platform_edition: QuickBooks Online Advanced, QuickBooks Online Essentials, QuickBooks Online Plus, QuickBooks Online Simple Start, QuickBooks Ledger, Intuit Enterprise Suite, QuickBooks Solopreneur Plus)

“Represents your starting balance before entering company assets and liabilities.”

Opening balance equity is not a true equity account but a temporary account accounting software uses to balance initial entries during setup of a company's books. (jurisdiction: not stated, entity_scope: not stated)

“Opening balance equity is not a true equity account. It is a temporary account used by accounting software to balance initial entries when setting up a company’s books.”

QuickBooks Online uses the Opening Balance Equity account to offset opening-balance entries and keep the books balanced. (jurisdiction: not_stated, entity_scope: Businesses and users of QuickBooks Online, platform: QuickBooks Online)

“Your **QuickBooks Online** accounts will now accurately reflect your real-world bank records as of your chosen start date. The software uses the Opening Balance Equity account to offset these entries and maintain balanced books.”

If entered opening-balance debits and credits differ, Zoho Books automatically posts a balancing entry to the Opening Balance Adjustments account. (entity_scope: Zoho Books organizations entering opening balances, platform: Zoho Books)

“If there is a difference found between the values, a corresponding entry will be posted to the Opening Balance Adjustments account automatically to balance them.”

Required authority: authoritative professional or accounting standard, official platform documentation. Highest achieved: high quality professional secondary reference, official platform documentation.

How accounting software creates and uses the account

See Opening Balance Equity is a default QuickBooks Online account that represents the company's starting balance before company assets and liabilities are entered.

See QuickBooks Online uses the Opening Balance Equity account to offset opening-balance entries and keep the books balanced.

See If entered opening-balance debits and credits differ, Zoho Books automatically posts a balancing entry to the Opening Balance Adjustments account.

When bank and credit card accounts are connected, QuickBooks derives the opening balance by adding up the transactions made since the date the user picked; if they are not connected, the user can enter the opening balance manually. (jurisdiction: not_stated, entity_scope: Businesses and users of QuickBooks Online, platform: QuickBooks Online)

“If you connect your bank and credit card accounts, we add up the transactions you've made since the date you picked and use them to get your opening balance. But if you don't, you can do so manually.”

In the QuickBooks Online opening-balance journal entry, the offsetting second-row account is Opening Balance Equity. (jurisdiction: United States, entity_scope: QuickBooks Online company files, platform: QuickBooks Online, platform_edition: QuickBooks Online (article labelled QuickBooks Ledger, Online Advanced, Essentials, Plus, Simple Start, Solopreneur, Online Free, Online Lite, Solopreneur Plus))

“On the second row of the Account column, select the dropdown and choose Opening Balance Equity .”

When a bank account or credit card is connected for transaction imports, Wave enters the starting balance automatically, and these transactions carry the description "Starting balance for". (jurisdiction: Not stated, entity_scope: Wave connected bank accounts and credit cards, platform: Wave, platform_edition: Wave (web version referenced for journal transactions), conditions: Bank or credit card connected for transaction imports)

“When you connect your bank account or credit card for transaction imports, Wave enters the starting balance for you. These starting balance transactions have the description "Starting balance for".”

In the account register the opening balance entry is identifiable because it shows Opening balance equity as the payee. (jurisdiction: not_stated, entity_scope: Businesses and users of QuickBooks Online, platform: QuickBooks Online)

“Select the opening balance entry, which shows **Opening balance equity** as the payee.”

A left-over balance in the Opening Equity account should be moved to other equity accounts or retained earnings, with an accountant's help. (jurisdiction: United States, entity_scope: QuickBooks Desktop company files, platform: QuickBooks Desktop, platform_edition: QuickBooks Desktop Premier Plus, QuickBooks Desktop Pro Plus, QuickBooks Accountant Desktop Plus, QuickBooks Desktop Enterprise Diamond, QuickBooks Desktop Enterprise Gold, QuickBooks Desktop Enterprise Platinum, QuickBooks Desktop Enterprise Accountant (as listed by the article))

“If there's a left-over balance in the Opening Equity account, it should go to other equity accounts or retained earnings. Work with your accountant to move this money correctly.”

Not established from an authoritative source.

What put a balance in it

See QuickBooks Online uses the Opening Balance Equity account to offset opening-balance entries and keep the books balanced.

See If entered opening-balance debits and credits differ, Zoho Books automatically posts a balancing entry to the Opening Balance Adjustments account.

See When bank and credit card accounts are connected, QuickBooks derives the opening balance by adding up the transactions made since the date the user picked; if they are not connected, the user can enter the opening balance manually.

See In the QuickBooks Online opening-balance journal entry, the offsetting second-row account is Opening Balance Equity.

Importing accounts does not bring in their opening balances; the opening balances have to be added after the import. (jurisdiction: not_stated, entity_scope: Businesses and users of QuickBooks Online, platform: QuickBooks Online)

“Note that when you import accounts, you can't bring in their opening balances. You'll need to add those after, but make sure you do, as the opening balances are very important.”

The opening balance summarises the account's old transactions, so adding those transactions later without adjusting the opening balance double-counts the money. (jurisdiction: not_stated, entity_scope: Businesses and users of QuickBooks Online, platform: QuickBooks Online)

“Remember, all of your old transactions were summarized in the opening balance. If you add them now without adjusting the opening balance, you'll count your money twice.”

See When a bank account or credit card is connected for transaction imports, Wave enters the starting balance automatically, and these transactions carry the description "Starting balance for".

The opening balance adjustments value shown on the Opening Balances page is the variance between the credit and debit amounts entered for each account on that page. (entity_scope: Zoho Books organizations entering opening balances, platform: Zoho Books)

“The value of the opening balance adjustments shown on the opening balance page reflects the variance between the credit and debit amounts entered for each account on the opening balance page.”

The Balance Sheet shows the opening-balance-page variance plus recorded transactions, because transactions dated on or before the migration date are also treated as opening balances for their accounts — so the two figures can differ. (entity_scope: Zoho Books organizations entering opening balances, platform: Zoho Books)

“The Balance Sheet report, on the other hand, will show the above value as well as the transactions recorded. Here, transactions created on or before the Migration date will also be considered as opening balances for the corresponding accounts.”

Partly established. Established: opening balances entered account by account (S04, S08). Missing: an account created with a balance after setup; an import or conversion that did not balance; deliberate postings to the account.

Tracing the individual entries behind the balance

See In the account register the opening balance entry is identifiable because it shows Opening balance equity as the payee.

An account register gives the history of an account and lists all past and current transactions associated with that account. (jurisdiction: not_stated, entity_scope: Businesses and users of QuickBooks Online, platform: QuickBooks Online, platform_edition: QuickBooks Online Plus | QuickBooks Online Simple Start | QuickBooks Online Essentials | QuickBooks Ledger | QuickBooks Online Free | QuickBooks Online Lite | QuickBooks Solopreneur Plus)

“An account register gives you the history of an account. It lists all past and current transactions associated with it.”

A report for a specific account is run by selecting Run report in the ACTION column of the Chart of accounts or from the View register dropdown. (jurisdiction: not_stated, entity_scope: Businesses and users of QuickBooks Online, platform: QuickBooks Online, platform_edition: QuickBooks Online Advanced, QuickBooks Online Plus, QuickBooks Online Simple Start, QuickBooks Online Essentials, QuickBooks Ledger, Intuit Enterprise Suite, QuickBooks Money, QuickBooks Online Free, QuickBooks Online Lite, QuickBooks Solopreneur Plus)

“Select **Run report** in the **ACTION** column or from the **View register** dropdown.”

The Opening Balance Equity account is found in the Chart of Accounts and can be opened directly by the user. (jurisdiction: United States, entity_scope: QuickBooks Desktop company files, platform: QuickBooks Desktop, platform_edition: QuickBooks Desktop Premier Plus, QuickBooks Desktop Pro Plus, QuickBooks Accountant Desktop Plus, QuickBooks Desktop Enterprise Diamond, QuickBooks Desktop Enterprise Gold, QuickBooks Desktop Enterprise Platinum, QuickBooks Desktop Enterprise Accountant (as listed by the article))

“Search for and open the Opening Balance Equity account.”

The audit log shows the date of each change, the user who made it, and any original transaction details. (jurisdiction: United States, entity_scope: businesses using QuickBooks Online, platform: QuickBooks Online)

“The audit log displays the date of the change, the user who made it, and any original transaction details.”

Selecting View in the History column opens the audit history for an individual transaction. (jurisdiction: United States, entity_scope: businesses using QuickBooks Online, platform: QuickBooks Online)

“Select **View** in the **History** column to open the audit history for that specific transaction.”

Where the Opening Balance Equity balance is not 0.00, the prescribed next step is to note the remaining balance and run a Balance Sheet Report for last year. (jurisdiction: United States, entity_scope: QuickBooks Desktop company files, platform: QuickBooks Desktop, platform_edition: QuickBooks Desktop Premier Plus, QuickBooks Desktop Pro Plus, QuickBooks Accountant Desktop Plus, QuickBooks Desktop Enterprise Diamond, QuickBooks Desktop Enterprise Gold, QuickBooks Desktop Enterprise Platinum, QuickBooks Desktop Enterprise Accountant (as listed by the article), conditions: Opening Balance Equity balance is not 0.00)

“If the balance isn't 0.00, don't worry. Write down the remaining balance. Then run a Balance Sheet Report for last year.”

Partly established. Established: identify the individual entries that make up the balance (S16, S17); the dates of those entries (S21). Missing: what each entry accompanied; require the tracing to happen before any reallocation is posted.

The reports and tools that show those entries

See The opening balance adjustments value shown on the Opening Balances page is the variance between the credit and debit amounts entered for each account on that page.

See The Balance Sheet shows the opening-balance-page variance plus recorded transactions, because transactions dated on or before the migration date are also treated as opening balances for their accounts — so the two figures can differ.

See In the account register the opening balance entry is identifiable because it shows Opening balance equity as the payee.

See An account register gives the history of an account and lists all past and current transactions associated with that account.

See A report for a specific account is run by selecting Run report in the ACTION column of the Chart of accounts or from the View register dropdown.

See The Opening Balance Equity account is found in the Chart of Accounts and can be opened directly by the user.

Admin access is required to see the audit log; a user who cannot see it should contact the primary admin for access. (jurisdiction: United States, entity_scope: businesses using QuickBooks Online, platform: QuickBooks Online)

“Admin access. If you can't see the audit log, contact your primary admin to get access.”

See The audit log shows the date of each change, the user who made it, and any original transaction details.

See Selecting View in the History column opens the audit history for an individual transaction.

QuickBooks automatically creates specific user profiles that appear in the audit log to track certain actions, so an unrecognised user name in the log is most likely one of them. (jurisdiction: United States, entity_scope: businesses using QuickBooks Online, platform: QuickBooks Online)

“QuickBooks automatically creates specific user profiles to track certain actions in the audit log. If you see a user you don't recognize, it's most likely one of these:”

Data sent or changed by a connected third-party app appears in the audit log as a System Administration event. (jurisdiction: United States, entity_scope: businesses using QuickBooks Online, platform: QuickBooks Online)

“You connect a third-party app to QuickBooks. When the third-party app sends data to QuickBooks, or when it makes a change to your existing data, this appears as a System Administration event.”

Not established from an authoritative source.

Setup residual, or the symptom of a real error?

See The opening balance summarises the account's old transactions, so adding those transactions later without adjusting the opening balance double-counts the money.

See The Balance Sheet shows the opening-balance-page variance plus recorded transactions, because transactions dated on or before the migration date are also treated as opening balances for their accounts — so the two figures can differ.

See QuickBooks automatically creates specific user profiles that appear in the audit log to track certain actions, so an unrecognised user name in the log is most likely one of them.

See Data sent or changed by a connected third-party app appears in the audit log as a System Administration event.

Indirect edits occur when someone modifies a transaction already on the books, such as an edited reconciliation. (jurisdiction: United States, entity_scope: businesses using QuickBooks Online, platform: QuickBooks Online)

“which occur when someone modifies a transaction already on your books, such as an edited reconciliation.”

See Where the Opening Balance Equity balance is not 0.00, the prescribed next step is to note the remaining balance and run a Balance Sheet Report for last year.

The remaining Opening Balance Equity balance is diagnosed by comparing it with last year's Retained Earnings balance. (jurisdiction: United States, entity_scope: QuickBooks Desktop company files, platform: QuickBooks Desktop, platform_edition: QuickBooks Desktop Premier Plus, QuickBooks Desktop Pro Plus, QuickBooks Accountant Desktop Plus, QuickBooks Desktop Enterprise Diamond, QuickBooks Desktop Enterprise Gold, QuickBooks Desktop Enterprise Platinum, QuickBooks Desktop Enterprise Accountant (as listed by the article))

“Compare last year's Retained Earnings balance with the remaining balance in the Opening Balance Equity account.”

If the remaining Opening Balance Equity balance matches last year's Retained Earnings the accounts are balanced; if not, the user is directed to their accountant. (jurisdiction: United States, entity_scope: QuickBooks Desktop company files, platform: QuickBooks Desktop, platform_edition: QuickBooks Desktop Premier Plus, QuickBooks Desktop Pro Plus, QuickBooks Accountant Desktop Plus, QuickBooks Desktop Enterprise Diamond, QuickBooks Desktop Enterprise Gold, QuickBooks Desktop Enterprise Platinum, QuickBooks Desktop Enterprise Accountant (as listed by the article))

“If they match, you're good to go. Everything is balanced. If they don't match, reach out to your accountant. They know how to get your accounts back in balance.”

Agreement between opening balance equity and the prior beginning equity accounts indicates the initial entry was accurate; disagreement calls for a review of the initial account balances entry for a data entry error. (jurisdiction: not stated, entity_scope: not stated, platform: QuickBooks)

“If the balances match, then the initial entry of accounts was accurate. If not, then review the initial account balances entry to see if there was a data entry error.”

Errors can arise regarding the recognition, measurement, presentation or disclosure of elements of financial statements; statements containing material errors, or immaterial errors made intentionally to achieve a particular presentation, do not comply with the framework; and potential current period errors discovered in that period are corrected before the financial statements are available to be issued. (jurisdiction: United States, entity_scope: small- and medium-sized entities that elect to use the AICPA FRF for SMEs accounting framework, accounting_basis: FRF for SMEs accounting framework (AICPA special purpose framework; not accounting principles generally accepted in the United States of America), conditions: use of the framework is optional; the document states it has no official or authoritative status)

“Errors can arise regarding the recognition, measurement, pre- sentation, or disclosure of elements of financial statements. Financial statements do not comply with the FRF for SMEs accounting framework if they contain either material errors or immaterial errors made intention- ally to achieve a particular presentation of an entity’s financial position, financial performance, or cash flows. Potential current period errors dis- covered in that period are corrected before the financial statements are available to be issued.”

Partly established. Established: distinguish a genuine setup residual from a balance that is the visible symptom of a real error (S27, S28, S29). Missing: the signals that separate them; that clearing without diagnosing makes the underlying error unrecoverable.

Required authority: authoritative professional or accounting standard, official platform documentation. Highest achieved: high quality professional secondary reference, official platform documentation.

Deciding where each traced amount belongs

See The remaining Opening Balance Equity balance is diagnosed by comparing it with last year's Retained Earnings balance.

See If the remaining Opening Balance Equity balance matches last year's Retained Earnings the accounts are balanced; if not, the user is directed to their accountant.

See Agreement between opening balance equity and the prior beginning equity accounts indicates the initial entry was accurate; disagreement calls for a review of the initial account balances entry for a data entry error.

Where the review finds a data entry error, the entry recording the initial account balances must be adjusted. (jurisdiction: not stated, entity_scope: not stated, platform: QuickBooks)

“If there was an error, then you will need to adjust your entry to record the initial account balances.”

Equity is increased or reduced both by changes in net assets from nonowner sources and by investments by owners and distributions to owners. (jurisdiction: United States, entity_scope: business entities)

“Equity is enhanced or reduced by increases and decreases in net assets from nonowner sources as well as investments by owners and distributions to owners.”

Owners of a business entity are variously called stockholders, partners or proprietors, and business-entity equity is correspondingly known by names such as owners' equity, stockholders' equity, equity capital, partners' capital and proprietorship. (jurisdiction: United States, entity_scope: business entities)

“Other entities with proprietary or ownership interests in a business entity are commonly known by specialized names, such as stockholders, partners, and proprietors, and by more general names, such as investors, but all are owners. Equity of business entities is thus commonly known by several names, such as owners’ equity, stockholders’ equity, ownership, equity capital, partners’ capital, and proprietorship.”

Investments by owners are increases in equity from transfers of something valuable to the entity to obtain or increase ownership interests; they are most commonly assets but may also take the form of services provided or liabilities satisfied or converted. (jurisdiction: United States, entity_scope: business entities and not-for-profit entities)

“Investments by owners are increases in equity of an entity resulting from transfers to the entity from other entities of something valuable to obtain or increase ownership interests (or equity) in the entity. Assets are the most common form of investments by owners, but owners’ investments also may take the form of providing services or satisfying or converting liabilities of the entity.”

Comprehensive income is the change in a business entity's equity during a period from nonowner sources, comprising all equity changes except investments by owners and distributions to owners. (jurisdiction: United States, entity_scope: business entities)

“Comprehensive income is the change in equity of a business entity during a period from transactions and other events and circumstances from nonowner sources. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners.”

Amounts owed to owners in a nonowner role — wages due, products or services due, accounts payable — are liabilities, not equity. (jurisdiction: United States, entity_scope: business entities)

“Wages due, products or services due, accounts payable due, and other amounts due to owners in their roles as employees, customers, suppliers, and the like are liabilities and not part of equity.”

An asset is a present right of an entity to an economic benefit. (jurisdiction: United States, entity_scope: business entities and not-for-profit entities)

“An asset is a present right of an entity to an economic benefit.”

A liability is a present obligation of an entity to transfer an economic benefit. (jurisdiction: United States, entity_scope: business entities and not-for-profit entities)

“A liability is a present obligation of an entity to transfer an economic benefit.”

As applicable, an entity should present separately, either in the body of the financial statements or in the accompanying notes, the components of equity: retained earnings, additional paid-in capital, capital stock, noncontrolling interests, and other components of equity. (jurisdiction: United States, entity_scope: small- and medium-sized entities that elect to use the AICPA FRF for SMEs accounting framework, accounting_basis: FRF for SMEs accounting framework (AICPA special purpose framework; not accounting principles generally accepted in the United States of America), conditions: use of the framework is optional; the document states it has no official or authoritative status)

“As applicable, an entity should present separately the following components of equity either in the body of the financial statements or in the accompanying notes: a. Retained earnings b. Additional paid-in capital c. Capital stock d. Noncontrolling interests (see chapter 23) e. Other components of equity”

Retained earnings comprises the accumulated balance of income less losses arising from the operation of the business after taking into account dividends and other amounts that may properly be charged or credited to it; when the accumulation is a negative figure “accumulated deficit” is a suitable designation; and in this framework the term retained earnings also refers to owners' capital accounts depending upon the nature of the entity. (jurisdiction: United States, entity_scope: small- and medium-sized entities that elect to use the AICPA FRF for SMEs accounting framework, accounting_basis: FRF for SMEs accounting framework (AICPA special purpose framework; not accounting principles generally accepted in the United States of America), conditions: use of the framework is optional; the document states it has no official or authoritative status)

“retained earnings. Comprises the accumulated balance of income less losses arising from the operation of the business after taking into account dividends and other amounts that may properly be charged or credited thereto. When the accumulation is a negative figure, “ac- cumulated deficit” is a suitable designation. As used in the FRF for SMEs accounting framework, the term retained earnings also refers to owners’ capital accounts, depending upon the nature of the entity.”

The financial statements of unincorporated businesses and partnerships should include a statement detailing the changes in the owners' equity during the period, detailing separately contributions of capital, income or losses, and withdrawals. (jurisdiction: United States, entity_scope: unincorporated businesses and partnerships using the FRF for SMEs accounting framework, accounting_basis: FRF for SMEs accounting framework (AICPA special purpose framework; not accounting principles generally accepted in the United States of America), conditions: use of the framework is optional; the document states it has no official or authoritative status)

“The financial statements of unincorporated businesses and partnerships should include a statement detailing the changes in the own- ers’ equity during the period, and this statement should detail separately contributions of capital, income or losses, and withdrawals.”

Additional paid-in capital comprises amounts paid in by equity holders, including premiums on shares issued, any portion of the proceeds of issue of shares without par value not allocated to capital stock, gain on forfeited shares, proceeds arising from shares contributed by equity holders, credits resulting from redemption or conversion of shares at less than the amount set up as capital stock, and any other contribution by equity holders in excess of amounts allocated to capital stock. (jurisdiction: United States, entity_scope: small- and medium-sized entities that elect to use the AICPA FRF for SMEs accounting framework, accounting_basis: FRF for SMEs accounting framework (AICPA special purpose framework; not accounting principles generally accepted in the United States of America), conditions: use of the framework is optional; the document states it has no official or authoritative status)

“additional paid-in capital. Comprises amounts paid in by equity hold- ers. Additional paid-in capital in the form of excess paid in by equity holders includes premiums on shares issued, any portion of the pro- ceeds of issue of shares without par value not allocated to capital stock, gain on forfeited shares, proceeds arising from shares contrib- uted by equity holders, credits resulting from redemption or conver- sion of shares at less than the amount set up as capital stock, and any other contribution by equity holders in excess of amounts allocated to capital stock.”

Charges against additional paid-in capital should be limited to instances when that disposition is clearly warranted by the circumstances, such as a charge that is the direct opposite of a credit previously carried to additional paid-in capital. (jurisdiction: United States, entity_scope: small- and medium-sized entities that elect to use the AICPA FRF for SMEs accounting framework, accounting_basis: FRF for SMEs accounting framework (AICPA special purpose framework; not accounting principles generally accepted in the United States of America), conditions: use of the framework is optional; the document states it has no official or authoritative status)

“Charges against additional paid-in capital should be limited to instances when that disposition is clearly warranted by the circumstances, such as a charge that is the direct opposite of a credit previously carried to additional paid-in capital.”

For an S corporation filing Form 1120-S, the owner-equity captions on the per-books balance sheet are capital stock, additional paid-in capital, retained earnings, adjustments to shareholders' equity, and less cost of treasury stock. (jurisdiction: United States, entity_scope: S corporation filing Form 1120-S, effective_from: tax year 2025)

“22 Capital stock . . . . . . . . . . . 23 Additional paid-in capital . . . . . . . 24 Retained earnings . . . . . . . . . 25 Adjustments to shareholders’ equity (attach statement) 26 Less cost of treasury stock”

Once setup is complete the opening balance equity balance should be reviewed and reclassified to appropriate accounts such as retained earnings or owner's equity. (jurisdiction: not stated, entity_scope: not stated)

“Once setup is complete, the balance should be reviewed and reclassified to appropriate accounts like retained earnings or owner’s equity.”

See A left-over balance in the Opening Equity account should be moved to other equity accounts or retained earnings, with an accountant's help.

Form 1065's analysis of partners' capital accounts moves from the balance at beginning of year by adding capital contributed (cash and property), net income (loss) and itemized other increases, and subtracting distributions (cash and property) and itemized other decreases, to reach the balance at end of year. (jurisdiction: United States, entity_scope: Partnership filing Form 1065, effective_from: tax year 2025)

“1 Balance at beginning of year . . . 6 Distributions: a Cash . . . . . . 2 Capital contributed: a Cash . . . b Property . . . . . b Property . . 7 Other decreases (itemize): 3 Net income (loss) (see instructions) . 4 Other increases (itemize): 8 Add lines 6 and 7 . . . . . . . . 5 Add lines 1 through 4 . . . . . . 9 Balance at end of year. Subtract line 8 from line 5”

Required authority: authoritative professional or accounting standard. Highest achieved: high quality professional secondary reference, official platform documentation, primary regulator or government.

The equity components an amount can be moved to

See Opening balance equity is not a true equity account but a temporary account accounting software uses to balance initial entries during setup of a company's books.

See Errors can arise regarding the recognition, measurement, presentation or disclosure of elements of financial statements; statements containing material errors, or immaterial errors made intentionally to achieve a particular presentation, do not comply with the framework; and potential current period errors discovered in that period are corrected before the financial statements are available to be issued.

Equity, or net assets, is the residual interest in an entity's assets remaining after deducting its liabilities. (jurisdiction: United States, entity_scope: business entities and not-for-profit entities)

“The terms equity or net assets represent the residual interest in the assets of an entity that remains after deducting its liabilities.”

See Equity is increased or reduced both by changes in net assets from nonowner sources and by investments by owners and distributions to owners.

Distinctions within equity — including between contributed capital and earned capital, and between stated or legal capital and other equity — are described as primarily matters of display and are outside the scope of this chapter. (jurisdiction: United States, entity_scope: business entities)

“In financial statements of business entities, various distinctions within equity, such as those between common stockholders’ equity and preferred stockholders’ equity, between contributed capital and earned capital, or between stated or legal capital and other equity, are primarily matters of display that are beyond the scope of this chapter.”

See Owners of a business entity are variously called stockholders, partners or proprietors, and business-entity equity is correspondingly known by names such as owners' equity, stockholders' equity, equity capital, partners' capital and proprietorship.

See Investments by owners are increases in equity from transfers of something valuable to the entity to obtain or increase ownership interests; they are most commonly assets but may also take the form of services provided or liabilities satisfied or converted.

See Comprehensive income is the change in a business entity's equity during a period from nonowner sources, comprising all equity changes except investments by owners and distributions to owners.

See Amounts owed to owners in a nonowner role — wages due, products or services due, accounts payable — are liabilities, not equity.

See An asset is a present right of an entity to an economic benefit.

See A liability is a present obligation of an entity to transfer an economic benefit.

See As applicable, an entity should present separately, either in the body of the financial statements or in the accompanying notes, the components of equity: retained earnings, additional paid-in capital, capital stock, noncontrolling interests, and other components of equity.

See Retained earnings comprises the accumulated balance of income less losses arising from the operation of the business after taking into account dividends and other amounts that may properly be charged or credited to it; when the accumulation is a negative figure “accumulated deficit” is a suitable designation; and in this framework the term retained earnings also refers to owners' capital accounts depending upon the nature of the entity.

See The financial statements of unincorporated businesses and partnerships should include a statement detailing the changes in the owners' equity during the period, detailing separately contributions of capital, income or losses, and withdrawals.

See Additional paid-in capital comprises amounts paid in by equity holders, including premiums on shares issued, any portion of the proceeds of issue of shares without par value not allocated to capital stock, gain on forfeited shares, proceeds arising from shares contributed by equity holders, credits resulting from redemption or conversion of shares at less than the amount set up as capital stock, and any other contribution by equity holders in excess of amounts allocated to capital stock.

See Charges against additional paid-in capital should be limited to instances when that disposition is clearly warranted by the circumstances, such as a charge that is the direct opposite of a credit previously carried to additional paid-in capital.

See For an S corporation filing Form 1120-S, the owner-equity captions on the per-books balance sheet are capital stock, additional paid-in capital, retained earnings, adjustments to shareholders' equity, and less cost of treasury stock.

See Once setup is complete the opening balance equity balance should be reviewed and reclassified to appropriate accounts such as retained earnings or owner's equity.

Prior period errors are omissions from, and misstatements in, the entity's financial statements for one or more prior periods arising from a failure to use, or the misuse of, reliable information that was available when the financial statements for those periods were available to be issued and that could reasonably be expected to have been obtained and taken into account in preparing and presenting those statements. (jurisdiction: United States, entity_scope: small- and medium-sized entities that elect to use the AICPA FRF for SMEs accounting framework, accounting_basis: FRF for SMEs accounting framework (AICPA special purpose framework; not accounting principles generally accepted in the United States of America), conditions: use of the framework is optional; the document states it has no official or authoritative status)

“prior period errors. Omissions from, and misstatements in, the entity’s financial statements for one or more prior periods arising from a fail- ure to use, or the misuse of, reliable information that s was available when financial statements for those periods were available to be issued and s could reasonably be expected to have been obtained and taken into account in the preparation and presentation of those financial statements”

Management should correct material prior period errors retrospectively in the first set of financial statements available to be issued after their discovery, by restating the comparative amounts for the prior period(s) presented when the error occurred, or, if the error occurred before the earliest prior period presented, by restating the opening balances of assets, liabilities and equity for the earliest prior period presented. (jurisdiction: United States, entity_scope: small- and medium-sized entities that elect to use the AICPA FRF for SMEs accounting framework, accounting_basis: FRF for SMEs accounting framework (AICPA special purpose framework; not accounting principles generally accepted in the United States of America), conditions: use of the framework is optional; the document states it has no official or authoritative status)

“Management should correct material prior period errors retro- spectively in the first set of financial statements available to be issued after their discovery by a. restating the comparative amounts for the prior period(s) pre- sented when the error occurred or b. if the error occurred before the earliest prior period presented, restating the opening balances of assets, liabilities, and equity for the earliest prior period presented.”

An entity should present separately the changes in equity for the period arising from net income (showing separately amounts attributable to owners of the parent and noncontrolling interests), other changes in retained earnings, changes in additional paid-in capital, changes in capital stock, and other changes in equity. (jurisdiction: United States, entity_scope: small- and medium-sized entities that elect to use the AICPA FRF for SMEs accounting framework, accounting_basis: FRF for SMEs accounting framework (AICPA special purpose framework; not accounting principles generally accepted in the United States of America), conditions: use of the framework is optional; the document states it has no official or authoritative status)

“An entity should present separately changes in equity for the period arising from each of the following: a. Net income, showing separately the total amounts attributable to owners of the parent and noncontrolling interests (see chapter 23) b. Other changes in retained earnings c. Changes in additional paid-in capital d. Changes in capital stock e. Other changes in equity”

See Form 1065's analysis of partners' capital accounts moves from the balance at beginning of year by adding capital contributed (cash and property), net income (loss) and itemized other increases, and subtracting distributions (cash and property) and itemized other decreases, to reach the balance at end of year.

Partly established. Established: what the components of equity in a small business are (S42); the treatment of a traced component that is the correction of a mis-entered opening balance (S32, S60). Missing: which of those components a traced residual can legitimately be reallocated to; the treatment of a traced component that is an asset or obligation that was never recorded.

Required authority: authoritative professional or accounting standard. Highest achieved: high quality professional secondary reference, primary regulator or government.

What the clearing entry has to carry with it

See Charges against additional paid-in capital should be limited to instances when that disposition is clearly warranted by the circumstances, such as a charge that is the direct opposite of a credit previously carried to additional paid-in capital.

When correcting a material prior period error, management should disclose the nature of the prior period error, for each prior period presented the amount of the correction for each financial statement line item affected, and the amount of the correction at the beginning of the earliest prior period presented. (jurisdiction: United States, entity_scope: small- and medium-sized entities that elect to use the AICPA FRF for SMEs accounting framework, accounting_basis: FRF for SMEs accounting framework (AICPA special purpose framework; not accounting principles generally accepted in the United States of America), conditions: use of the framework is optional; the document states it has no official or authoritative status; correction of a material prior period error under paragraph 9.22)

“When applying paragraph 9.22, management should disclose the following: a. The nature of the prior period error b. For each prior period presented, the amount of the correction for each financial statement line item affected c. The amount of the correction at the beginning of the earliest prior period presented”

Significant journal entries or other adjustments to the financial statements are among the significant, unusual or complex transactions, events or matters the accountant inquires about in a review. (jurisdiction: United States, entity_scope: Accountants performing a review of an entity's financial statements)

“iii. Significant journal entries or other adjustments to the financial statements”

The illustrative review representation letter includes management's representation that it is in agreement with the adjusting journal entries the accountant has recommended and that they have been posted to the company's accounts, if applicable. (jurisdiction: United States, entity_scope: Accountants performing a review of an entity's financial statements, conditions: Illustrative representation letter; representation letters are ordinarily tailored to the entity)

“We are in agreement with the adjusting journal entries that you have recommended, and they have been posted to the company’s accounts (if applicable).”

Review documentation is to enable an experienced accountant to understand the nature, timing and extent of the review procedures performed; the review evidence obtained and the accountant's conclusions formed on the basis of that evidence; and significant matters arising during the review, the conclusions reached on them and the significant professional judgments made in reaching those conclusions. (jurisdiction: United States, entity_scope: Accountants performing a review of an entity's financial statements, effective_from: reviews of financial statements for periods ending on or after December 15, 2021 (SSARS No. 25))

“a. The nature, timing, and extent of the review procedures performed to comply with SSARSs b. The review evidence obtained from the review procedures performed and the accountant’s conclusions formed on the basis of that review evidence c. Significant matters arising during the review, the accountant’s conclusions reached thereon, and significant professional judgments made in reaching those conclusions”

In documenting the nature, timing and extent of procedures performed, the accountant should record who performed the work and the date it was completed, and who reviewed the work performed and the date and extent of that review. (jurisdiction: United States, entity_scope: Accountants performing a review of an entity's financial statements, effective_from: reviews for periods ending on or after December 15, 2021 (SSARS No. 25); amended for periods beginning on or after December 15, 2025 (SSARS No. 26))

“.139 In documenting the nature, timing, and extent of procedures performed as required in this section, the accountant should record the following: a. Who performed the work and the date such work was completed b. Who reviewed the work performed and the date and extent of the review”

To address the risk of management override of controls the auditor should test the appropriateness of journal entries recorded in the general ledger and other adjustments made in preparing the financial statements, including entries posted directly to financial statement drafts, and in doing so should understand the entity's financial reporting process and controls over journal entries and other adjustments, inquire of individuals involved about inappropriate or unusual activity in processing entries, consider fraud risk indicators and unusual entries processed, select entries and adjustments made at the end of a reporting period, and consider the need to test entries throughout the period. (jurisdiction: United States, entity_scope: audits of financial statements of nonissuers conducted in accordance with U.S. generally accepted auditing standards (auditor responsibilities), effective_from: audits of financial statements for periods ending on or after December 15, 2012)

“test the appropriateness of journal entries recorded in the general ledger and other adjustments made in the preparation of the financial statements, including entries posted directly to financial statement drafts. In designing and performing audit procedures for such tests, the auditor should (Ref: par. .A47–.A50 and .A56) i. obtain an understanding of the entity’s financial reporting process and controls over journal entries and other adjustments, and, in accordance with section 315, evaluate the design and determine whether the controls have been implemented;13 ii. make inquiries of individuals involved in the financial reporting process about inappropriate or unusual activity relating to the processing of journal entries and other adjustments; iii. consider fraud risk indicators, the nature and complexity of accounts, and unusual entries processed; iv. select journal entries and other adjustments made at the end of a reporting period; and v. consider the need to test journal entries and other adjustments throughout the period.”

Material misstatements due to fraud often involve manipulating the financial reporting process by recording inappropriate or unauthorized journal entries during the year or at period end, or by making adjustments to reported amounts that are not reflected in formal journal entries, such as consolidating adjustments, report combinations and reclassifications. (jurisdiction: United States, entity_scope: audits of financial statements of nonissuers conducted in accordance with U.S. generally accepted auditing standards (auditor responsibilities), effective_from: audits of financial statements for periods ending on or after December 15, 2012)

“.A47 Material misstatements of financial statements due to fraud often involve the manipulation of the financial reporting process by (a) recording inappropriate or unauthorized journal entries throughout the year or at period end, or (b) making adjustments to amounts reported in the financial statements that are not reflected in formal journal entries, such as through consolidating adjustments, report combinations, and reclassifications.”

Inappropriate journal entries or other adjustments often have unique identifying characteristics, which may include entries made to unrelated, unusual or seldom-used accounts; entries made by individuals who typically do not make journal entries; entries recorded at period end or as postclosing entries with little or no explanation or description; entries made before or during preparation of the financial statements that do not have account numbers; or entries containing round numbers or consistent ending numbers. (jurisdiction: United States, entity_scope: audits of financial statements of nonissuers conducted in accordance with U.S. generally accepted auditing standards (auditor responsibilities), effective_from: audits of financial statements for periods ending on or after December 15, 2012)

“The characteristics of fraudulent journal entries or other adjustments. Inappropriate journal entries or other adjustments often have unique identifying characteristics. Such characteristics may include entries (a) made to unrelated, unusual, or seldom- used accounts; (b) made by individuals who typically do not make journal entries; (c) recorded at the end of the period or as postclosing entries that have little or no explanation or description; (d) made either before or during the preparation of the financial statements that do not have account numbers; or (e) containing round numbers or consistent ending numbers.”

The accountant should obtain evidence that the financial statements agree or reconcile with the accounting records. (jurisdiction: United States, entity_scope: Accountants performing a review of an entity's financial statements)

“.41 The accountant should obtain evidence that the financial statements agree or reconcile with the accounting records.”

Partly established. Established: what the clearing entry must consist of (S49, S50); who approved the entry (S53). Missing: the trace the entry rests on; the reasoning for each destination.

Required authority: authoritative professional or accounting standard. Highest achieved: authoritative professional or accounting standard, high quality professional secondary reference, official platform documentation.

What professional standards expect of such an entry

See When correcting a material prior period error, management should disclose the nature of the prior period error, for each prior period presented the amount of the correction for each financial statement line item affected, and the amount of the correction at the beginning of the earliest prior period presented.

See Significant journal entries or other adjustments to the financial statements are among the significant, unusual or complex transactions, events or matters the accountant inquires about in a review.

See The illustrative review representation letter includes management's representation that it is in agreement with the adjusting journal entries the accountant has recommended and that they have been posted to the company's accounts, if applicable.

See Review documentation is to enable an experienced accountant to understand the nature, timing and extent of the review procedures performed; the review evidence obtained and the accountant's conclusions formed on the basis of that evidence; and significant matters arising during the review, the conclusions reached on them and the significant professional judgments made in reaching those conclusions.

See In documenting the nature, timing and extent of procedures performed, the accountant should record who performed the work and the date it was completed, and who reviewed the work performed and the date and extent of that review.

See To address the risk of management override of controls the auditor should test the appropriateness of journal entries recorded in the general ledger and other adjustments made in preparing the financial statements, including entries posted directly to financial statement drafts, and in doing so should understand the entity's financial reporting process and controls over journal entries and other adjustments, inquire of individuals involved about inappropriate or unusual activity in processing entries, consider fraud risk indicators and unusual entries processed, select entries and adjustments made at the end of a reporting period, and consider the need to test entries throughout the period.

See Material misstatements due to fraud often involve manipulating the financial reporting process by recording inappropriate or unauthorized journal entries during the year or at period end, or by making adjustments to reported amounts that are not reflected in formal journal entries, such as consolidating adjustments, report combinations and reclassifications.

See Inappropriate journal entries or other adjustments often have unique identifying characteristics, which may include entries made to unrelated, unusual or seldom-used accounts; entries made by individuals who typically do not make journal entries; entries recorded at period end or as postclosing entries with little or no explanation or description; entries made before or during preparation of the financial statements that do not have account numbers; or entries containing round numbers or consistent ending numbers.

See Management should correct material prior period errors retrospectively in the first set of financial statements available to be issued after their discovery, by restating the comparative amounts for the prior period(s) presented when the error occurred, or, if the error occurred before the earliest prior period presented, by restating the opening balances of assets, liabilities and equity for the earliest prior period presented.

The accountant's review inquiries cover the status of any uncorrected misstatements identified during the previous review - that is, whether adjustments were recorded subsequent to the periods covered by the prior review and, if adjustments were recorded, the amounts recorded and the period in which they were recorded. (jurisdiction: United States, entity_scope: Accountants performing a review of an entity's financial statements)

“v. The status of any uncorrected misstatements identified during the previous review (that is, whether adjustments were recorded subsequent to the periods covered by the prior review and, if adjustments were recorded, the amounts recorded and period in which such adjustments were recorded)”

The accountant is not required to perform review procedures on the financial statements after the date of the review report, but if a subsequently discovered fact becomes known before the report release date the accountant should discuss the matter with management and, when appropriate, those charged with governance, and determine whether the financial statements need revision and, if so, inquire how management intends to address it in the financial statements. (jurisdiction: United States, entity_scope: Accountants performing a review of an entity's financial statements, effective_from: reviews of financial statements for periods ending on or after December 15, 2021 (SSARS No. 25), conditions: The fact becomes known to the accountant before the report release date)

“.51 The accountant is not required to perform any review procedures regarding the financial statements after the date of the accountant’s review report. However, if a subsequently discovered fact becomes known to the accountant before the report release date, the accountant should a. discuss the matter with management and, when appropriate, those charged with governance and b. determine whether the financial statements need revision and, if revision is needed, inquire how management intends to address the matter in the financial statements.”

If a subsequently discovered fact becomes known to the accountant after the report release date, the accountant should discuss the matter with management and, when appropriate, those charged with governance, and determine whether the financial statements need revision and, if so, inquire how management intends to address it in the financial statements. (jurisdiction: United States, entity_scope: Accountants performing a review of an entity's financial statements, effective_from: reviews of financial statements for periods ending on or after December 15, 2021 (SSARS No. 25), conditions: The fact becomes known to the accountant after the report release date)

“.54 If a subsequently discovered fact becomes known to the accountant after the report release date, the accountant should (Ref: par. .A80–.A81) a. discuss the matter with management and, when appropriate, those charged with governance and b. determine whether the financial statements need revision and, if revision is needed, inquire how management intends to address the matter in the financial statements.”

Where management revises the financial statements after a subsequently discovered fact becomes known post-release, the accountant should apply paragraph .52; where the pre-revision reviewed financial statements were made available to third parties, assess whether management's steps are timely and appropriate to inform recipients that those statements are not to be used; and, if the conclusion on the revised statements differs from that on the original, disclose in an emphasis-of-matter paragraph the date of the previous report, a description of the revisions and the substantive reasons for them. (jurisdiction: United States, entity_scope: Accountants performing a review of an entity's financial statements, effective_from: reviews of financial statements for periods ending on or after December 15, 2021 (SSARS No. 25), conditions: Management revises the financial statements after the report release date)

“.55 If management revises the financial statements, the accountant should do the following: a. Apply the requirements of paragraph .52. b. If the reviewed financial statements (before revision) have been made available to third parties, assess whether the steps taken by management are timely and appropriate to ensure that anyone in receipt of those financial statements is informed of the situation, including that the reviewed financial statements are not to be used. If management does not take the necessary steps, the accountant should apply the requirements of paragraph .56. (Ref: par. .A82) c. If the accountant’s conclusion on the revised financial statements differs from the accountant’s conclusion on the original financial statements, disclose in an emphasis- of-matter paragraph, in accordance with paragraphs .89–.90, i. the date of the accountant’s previous report, ii. a description of the revisions, and iii. the substantive reasons for the revisions.”

The accountant should include an emphasis-of-matter paragraph in the review report when the related financial statements are restated to correct a prior material misstatement. (jurisdiction: United States, entity_scope: Accountants performing a review of an entity's financial statements, effective_from: reviews of financial statements for periods ending on or after December 15, 2021 (SSARS No. 25))

“The accountant should include this type of emphasis-of-matter paragraph in the accountant’s review report when the related financial statements are restated to correct the prior material misstatement.”

Indicators of material weaknesses in internal control include identification of fraud on the part of senior management, whether or not material, and restatement of previously issued financial statements to reflect the correction of a material misstatement due to fraud or error. (jurisdiction: United States, entity_scope: audits of financial statements of nonissuers conducted in accordance with U.S. generally accepted auditing standards (auditor responsibilities), effective_from: audits of financial statements for periods ending on or after December 15, 2012)

“identification of fraud, whether or not material, on the part of senior management. For the purpose of this indicator, the term “senior management” includes the principal executive and financial officers as well as any other members of senior management who play a significant role in the entity’s financial reporting process; • restatement of previously issued financial statements to reflect the correction of a material misstatement due to fraud or error;”

Partly established. Established: what constrains posting such an entry into a period already reported (S51, S60, S64, S65, S66). Missing: the professional expectation for supporting and documenting an entry that reallocates an amount within equity.

Which period the clearing entry is dated in

See Errors can arise regarding the recognition, measurement, presentation or disclosure of elements of financial statements; statements containing material errors, or immaterial errors made intentionally to achieve a particular presentation, do not comply with the framework; and potential current period errors discovered in that period are corrected before the financial statements are available to be issued.

See Prior period errors are omissions from, and misstatements in, the entity's financial statements for one or more prior periods arising from a failure to use, or the misuse of, reliable information that was available when the financial statements for those periods were available to be issued and that could reasonably be expected to have been obtained and taken into account in preparing and presenting those statements.

See Management should correct material prior period errors retrospectively in the first set of financial statements available to be issued after their discovery, by restating the comparative amounts for the prior period(s) presented when the error occurred, or, if the error occurred before the earliest prior period presented, by restating the opening balances of assets, liabilities and equity for the earliest prior period presented.

Financial statements are available to be issued when a complete set including all required note disclosures has been prepared, all final adjusting journal entries have been reflected in them, no changes to the financial statements are planned or expected, and the financial statements meeting the preceding requirements have been approved in accordance with the entity's process to finalize its financial statements. (jurisdiction: United States, entity_scope: small- and medium-sized entities that elect to use the AICPA FRF for SMEs accounting framework, accounting_basis: FRF for SMEs accounting framework (AICPA special purpose framework; not accounting principles generally accepted in the United States of America), conditions: use of the framework is optional; the document states it has no official or authoritative status)

“available to be issued. Financial statements are available to be issued when s a complete set of financial statements, including all required note disclosures, has been prepared (see paragraphs 2.10–.12); s all final adjusting journal entries have been reflected in the finan- cial statements (for example, adjustments for income taxes and bonuses); s no changes to the financial statements are planned or expected; and s the financial statements meeting the preceding requirements have been approved in accordance with the entity’s process to finalize its financial statements.”

See The accountant's review inquiries cover the status of any uncorrected misstatements identified during the previous review - that is, whether adjustments were recorded subsequent to the periods covered by the prior review and, if adjustments were recorded, the amounts recorded and the period in which they were recorded.

See The accountant is not required to perform review procedures on the financial statements after the date of the review report, but if a subsequently discovered fact becomes known before the report release date the accountant should discuss the matter with management and, when appropriate, those charged with governance, and determine whether the financial statements need revision and, if so, inquire how management intends to address it in the financial statements.

See If a subsequently discovered fact becomes known to the accountant after the report release date, the accountant should discuss the matter with management and, when appropriate, those charged with governance, and determine whether the financial statements need revision and, if so, inquire how management intends to address it in the financial statements.

See Where management revises the financial statements after a subsequently discovered fact becomes known post-release, the accountant should apply paragraph .52; where the pre-revision reviewed financial statements were made available to third parties, assess whether management's steps are timely and appropriate to inform recipients that those statements are not to be used; and, if the conclusion on the revised statements differs from that on the original, disclose in an emphasis-of-matter paragraph the date of the previous report, a description of the revisions and the substantive reasons for them.

See The accountant should include an emphasis-of-matter paragraph in the review report when the related financial statements are restated to correct a prior material misstatement.

See Indicators of material weaknesses in internal control include identification of fraud on the part of senior management, whether or not material, and restatement of previously issued financial statements to reflect the correction of a material misstatement due to fraud or error.

Confirming the account is clear and the balance sheet still holds

See Agreement between opening balance equity and the prior beginning equity accounts indicates the initial entry was accurate; disagreement calls for a review of the initial account balances entry for a data entry error.

See As applicable, an entity should present separately, either in the body of the financial statements or in the accompanying notes, the components of equity: retained earnings, additional paid-in capital, capital stock, noncontrolling interests, and other components of equity.

The Opening Balance Equity account balance should be 0.00 once opening balances are entered correctly. (jurisdiction: United States, entity_scope: QuickBooks Desktop company files, platform: QuickBooks Desktop, platform_edition: QuickBooks Desktop Premier Plus, QuickBooks Desktop Pro Plus, QuickBooks Accountant Desktop Plus, QuickBooks Desktop Enterprise Diamond, QuickBooks Desktop Enterprise Gold, QuickBooks Desktop Enterprise Platinum, QuickBooks Desktop Enterprise Accountant (as listed by the article))

“Check the account balance. It should be 0.00.”

After all account balances have been entered, the total opening balance equity is compared to the sum of all beginning equity accounts in the prior account balances. (jurisdiction: not stated, entity_scope: not stated, platform: QuickBooks)

“Once the account entry process is completed for all accounts, compare the total opening balance equity to the sum of all beginning equity accounts listed in the prior account balances.”

See The accountant should obtain evidence that the financial statements agree or reconcile with the accounting records.

See An entity should present separately the changes in equity for the period arising from net income (showing separately amounts attributable to owners of the parent and noncontrolling interests), other changes in retained earnings, changes in additional paid-in capital, changes in capital stock, and other changes in equity.

See Form 1065's analysis of partners' capital accounts moves from the balance at beginning of year by adding capital contributed (cash and property), net income (loss) and itemized other increases, and subtracting distributions (cash and property) and itemized other decreases, to reach the balance at end of year.

Required authority: authoritative professional or accounting standard. Highest achieved: authoritative professional or accounting standard, high quality professional secondary reference, official platform documentation, primary regulator or government.

When not to clear the balance yourself

See If the remaining Opening Balance Equity balance matches last year's Retained Earnings the accounts are balanced; if not, the user is directed to their accountant.

See A left-over balance in the Opening Equity account should be moved to other equity accounts or retained earnings, with an accountant's help.

Intuit directs users who are unsure about opening balances for balance sheet accounts to consult their accountant. (jurisdiction: United States, entity_scope: QuickBooks Desktop company files, platform: QuickBooks Desktop, platform_edition: QuickBooks Desktop Premier Plus, QuickBooks Desktop Pro Plus, QuickBooks Accountant Desktop Plus, QuickBooks Desktop Enterprise Diamond, QuickBooks Desktop Enterprise Gold, QuickBooks Desktop Enterprise Platinum, QuickBooks Desktop Enterprise Accountant (as listed by the article), conditions: user is unsure or has questions)

“If you're unsure or have questions, reach out to your accountant.”

Misstatements, including omissions, are generally considered material if there is a substantial likelihood that individually or in the aggregate they would influence the judgment made by a reasonable user based on the financial statements. (jurisdiction: United States, entity_scope: audits of financial statements of nonissuers conducted in accordance with U.S. generally accepted auditing standards (auditor responsibilities))

“In general, misstatements, including omissions, are considered to be material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.”

Materiality judgments are made in light of surrounding circumstances, involve both qualitative and quantitative considerations, and are affected by the size or nature of a misstatement or both. (jurisdiction: United States, entity_scope: audits of financial statements of nonissuers conducted in accordance with U.S. generally accepted auditing standards (auditor responsibilities))

“Judgments about materiality are made in light of surrounding circumstances, and involve both qualitative and quantitative considerations. These judgments are affected by the auditor’s perception of the financial information needs of users of the financial statements, and by the size or nature of a misstatement, or both.”

Partly established. Established: what to do instead (S28, S50, S74). Missing: when the balance cannot be traced; when the balance is large relative to the business's equity.

Required authority: authoritative professional or accounting standard. Highest achieved: authoritative professional or accounting standard, official platform documentation.