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What is Opening Bal Equity?

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.

Opening Bal Equity and retained earnings

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 owners).

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