When you set up your company in QuickBooks as of a particular start date,
you may already have company assets and liabilities as of that date. When you
tell QuickBooks the opening balances of your assets and liabilities, QuickBooks
automatically enters those amounts in an equity account named Opening Bal
Equity. QuickBooks creates Opening Bal Equity to ensure that you will have a
correct balance sheet when you first set up your QuickBooks company.
If you have set up other equity accounts to track an owner's capital
investment or an owner's draw, you may want to transfer money from Opening
Bal Equity to those accounts.
If you've created an equity account to track your investment and draws
and entered a starting balance for that account, it's likely that money
left in Opening Bal Equity is retained earnings from prior years. If that's
the case, you can transfer the Opening Bal Equity amount to Retained Earnings.
(Retained Earnings is another equity account that QuickBooks creates.
QuickBooks uses the Retained Earnings account to track profits from earlier
accounting periods that have not been distributed to the company's