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Question
What is an opening entry?
Solution
- At the end of the accounting year, all nominal accounts are closed but the business has to be carried on with the previous year’s assets and liabilities.
- These accounts are to be brought into the accounts of the current year.
- Journal entry made at the beginning of the current year with the balances of assets and liabilities of the previous year is opening journal entry.
- In this entry, asset accounts are debited, liabilities and capital accounts are credited.
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