Opening Balance

The debit or credit balance of a ledger account brought forward from the old accounting period to the new accounting period is called opening balance. This will be the first entry in a ledger account at the beginning of an accounting period. In other words, the closing balance of your previous accounting period will become the opening balance for the new accounting period.

A newly started business will not have any closing balances for the previous accounting year that has to be carried forward. Instead, the investments and capital of the business will be entered as opening balance for the current accounting year.

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Related Terms

• Operating Cost Ratio
• Operating Expenses
• Operating Income