How does MYOB calculate Historical Balancing

[Shazs]

I'm trying to work out how MYOB calculates The Historical Balancing? It is showing that is linked to my chq account and undepsoted funds account. There is an Opening Balance which I haven't entered, so it's a MYOB generated balance and it won't let you alter it. So where does this figure come from?? 

[gavin12345]

Hi @Shazs 

There are 2 answers to your question:

• When things work as they should, a user can go to Setup > Balances > Account Opening Balances and set the balance sheet balances as per the financial statements at the time you commence using MYOB. So for example if someone has been using a different accounting system and on 1 July 2023 that start using MYOB, they can set the Balance Sheet account balances for 1 July 2023 as per the balances in the earlier system. 
  
  With double entry bookkeeping, for every debit there has to be an offsetting credit. As you set one account balance (say Cheque account balance is set to $100), the Historical Balancing Account will show -$100. The historical balance fluctuates as you set all of the Asset, Liability and Equity account opening balances. If everything was done correctly the Historical balance at the end should match the sum of the retained earnings and current year earnings as at 30 June 2023 in the earlier software. Once this is updated, the Historical Balance shows $0 - in other words all of your debits are offset by credits. If the Historical Balance is not $0, MYOB doesn't know what to do with the difference, so it is held in the Historical Balance account until you or your accountant sort it out.
  
  The drawback with this method and why some recommend against using this feature is there is no 'security' around it. 5 years down the track, someone can open Setup > Balances > Account Opening Balances and accidentally delete one of the balances. Suddenly your accounts are out of balance and no-one can tell why. I recommend users set the opening balances with an appropriately notated General Journal dated 1 July 2023. This way the balances get locked in and are less likely to be changed accidentally, plus an audit trail will be maintained.

• MYOB has a number of bugs affecting historical balances - these are yet to be fixed. Do a for search on this topic and you will see. When accounts are changed from header to detail accounts or vice versa, if one of the sub accounts had an opening balance, this affects the Historical Balance account, even when it shouldn't. Changing the account back, rather than fixing the problem, duplicates it. So the historical balance can grow and grow.

Hope this helps

Gavin