Initial Data Population
You've got a blank file with all your accounts configured, the Statements Worksheet is prepped, the raw transaction worksheets are ready for download data, and the Journal worksheets are ready for data to be categorized.
The next step is Initial Data Population.
One of three situations applies:
1) No Prior Information Exists or is Desired-- This is a new file for a new business or for someone who is tracking their personal finances from scratch without a care for prior information. If this is the case, you just need to create a few zero balance entries and then start with the use process.
2) Prior Information Exists and you are brining "All of it" in -- You have some older account. You want to enter all data for those accounts since the time they were first opened. As such you are always starting with a zero balance on the date an account was opened.
3) Prior Information Exists and you are brining "Some of it" in -- You have some older accounts you want to enter, and you only want to enter data starting at some point in history, but not going back to the origination of that account. This is the one that requires some clever understanding and this is the situation which created the need for the 6th Account Type called "ZAP Special".
The first two scenarios are easy. The last one is too, as long as you understand the issues that arise from doing it, the way you need to handle those, and our "ZAP Special" Account type created to fix a long standing issue with Digital Software setup.
1) No Prior information Exists or is Required
This is easy. Do it now or do it when you start entering data.
1) Statements Worksheet - Confirm zero is in the starting Balance Cell for Each Data Table.
This cell is relevant in each data table you will use and it is not overtly marked. It is the red cell below the "Ending Balance" label in each data table.
The value inside the red circle should be ZERO for this scenario.
2) Journal Worksheets - Enter an Opening Balance of Zero with the ZAP Special Opening Balance Category.
======== Details ========
Date - The Date for the entry should be equal to or prior to the first date you will have a transaction for that Journal. NOTE: This range of flexibility only applies for ZERO balances. It's a bit different if the starting balance is not zero.
Payor/Payee/Description - Enter anything you'd like. "Opening Balance" is common.
Amount - $0.00
Acct2 - "99_opening_balance"
TxnID - 0
2) Prior Information Exists and you are brining "All of it" in
If you are brining all historical information in that has ever existed related to your data, it means that, like above, your starting balances for all of your accounts are ZERO. If that is the case you will do the exact same thing as above now or when you bring in your first data.
NOTE: If all transfers from one asset/liability account to another are self contained in the Asset and Liability Accounts you are bringing in, this is easy. If in you have some transactions you need to categorize as transfers to accounts you are no longer bringing in it all, like old credit card accounts, you are not in fact bringing it all in. Please follow instructions for Scenario 3 Below.
3) Prior Information Exists and you are bringing "Some of it" in
This is the situation that causes the most chaos in New Bookkeeping File Setup for any software. Ours is going to be the easiest and the most transparent due to the addition of a 6th Account Type for the digital age.
All other software will be fudging their systems with opening balances or they/you will use a "suspended expense account" to get the Balance Sheet to Balance. When such an account or adjustment mechanism is used but hidden, it creates huge confusion for most individuals.
Statements Worksheet, Opening Balances - Same as above, but enter the non-zero value as applicable.
Journal Worksheets, Opening Balances - Same as above but enter non zero values as applicable . !!IMPORTANT!! The Date of the starting balance entry in the Journal will need to be at least 1 day prior to the first Statement Start Date you will be entering (or does it, need to check.?? This won't affect Statements Reconcile but it does affect Balance Sheet? I don't think so..
Journal Worksheets , Relevant Transfers that are going to ghost accounts - In Asset/Liability Journals, transactions are transfers to other Asset/Liability accounts with Journals, Asset/Liability Accounts without Journals, Equity Transactions or Income/Expense Transactions. (or ZAP Special).
Imagine this scenario. You are trying to start a New Bookkeeping Account for the year 2020. You were told always to start with a month or two's worth of data prior for Audit purposes.
You decide to start your Checking Account Tracking with your November 1 through November 30 statement. On November 5th you made a transfer from your checking account to pay off your credit card. No problem except you weren't going to track your credit card statement until it started on November 16. As such the balancing portion of that transfer that shows the credit card pay down will not be in your records.
One "right" way to do this is to start the credit card records the same day you start the checking account. That can work. But you may/will need to futz with faux Statement Start Dates and a calculated Starting Balance that is not easy to verify in your Journal.
Another "right" way to do this in our system is to simply use a 99_zap_transfer record. That will in fact create a double entry record in the General Ledger, keeping that in Balance while not causing reporting issues. Furthermore, that transacation will be viable on the "incremental" portion of the Balance Sheet anytime the date range is used that includes that transaction.
This is an extremely heady topic that even most CPA's can't discuss without confusion because it's more a a digital data management thing than a true issue in accounting.
ZAP Special - the new 6th Account Type
The Five Standard Account Types are Asset, Liability, Equity, Income and Expense.
Our " Opening Balance" Transaction Account belongs to an Account Type that is not found in other Software. Functionally, this "ZAP Special" Account type acts and behaves like an expense account. But because it's not an expense account, it does not need to be suspended to be excluded in reporting.
Furthermore, it is added to the "incremental" portion of the Balance Sheet to provide the insight that is not seen publicly when suspended accounts are masked from reporting. This same account type is assigned to "ghost transfer" transactions too.
The place to learn about what needs to happen digitally in our software or any double entry software during a startup phase when all the data since the beginning of time is not going to be brought in is right here.
We are going to tell you how to handle it and give you a glimpse at the hairball that made setting up Bookkeeping Files without all data so daunting for the uninitiated.
For most this is all you need to know.
For those who want more. see the "Bookkeepers' Secrets" Book 5b.