Temporary account in Opening balance not nullified

Can someone explain, how to use the temporary accounts?

I created an opening balance for a new company with Journal Voucher and temporary account, but the temporary account is not nullified.

Is this intended? Or do I need to trigger it somehow?

The documentation is a silent about this issue.

We are uploading the balance sheet accounts to update the opening balances in ERPNext. Ir should be a closed balance sheet where asset=liability + equity. Temporary accounts are using to update the closing stock, outstanding receivables and outstanding payables.

For eg: if my closing stock value is 10000, when I upload the balances through opening entry, i will use temporary account instead of closing stock. So the temporary account will.be debited by 10000. Then through stock reconciliation or though stock entry, i will update the opening stock. Here I will give temporary account as the difference account. So in that entry, my stock in hand will be debited by 10000 and the temporary account will be credited by 10000. Now the temporary account is nullified and I have a stock in hand of 10000. The same is applicable to outstanding invoices. Hope it is clear. Thank you.

This is exactly what I’m doing but not with stock, but with bank accounts. However the temporary acount is not nullified, thus the balance remains 0.

So I wonder under which circumstances the temp account is going to be nullified??

You don’t need temporary account to add the opening balances of bank accounts. First you need a closed balance sheet. You need the temporary account only to add the outstanding sales invoices, purchase invoices and opening stock. If the balance sheet is not closed, you can add the difference in temporary account for the time being. But you need to close the same and add the difference to any other account.

maybe I’m not understanding basic accounting, but when I have no account that I can credit, I cannot debit my bank account, am I correct?

Since this is a fresh installation, balance sheet is zero anyway. Just want to add assets like bank assets into the accounting now.

E.g. Let’s say bank account has 100.00 USD, So how can I add this to the balance?

How you got this balance in bank account?Either it’s from capital or you borrowed from someone right? So you can credit the capital account or any other liability account.

hi, not necessarily.
It is equity.
Suppose we have 100USD on our bank account, no liabilities, no loans and whatsoever.

Thus Our equity equals our assets, correct? This is the starting point. Assests (bank) = equity = 100USD.

When using a liability account in ERPNext for opening balance this happens:
Assets = 100USD
Liabilities (temporary account) = 100 USD
Equity = 0 USD

The balance statement will be wrong! And this is what happens.
Same goes with opening of stock, why should the stock that the company already owns be credited to liabilites? (except it will be nullified afterwards).

Thus the temporary account needs to be nullified for my understanding. It should just be to satisfy the transaction being in balance. But afterwards I’d expect it to be nullified. The opening balance should be an exceptional case handled by ERPNext.

I wonder what the “Opening Entry” option in Journal Voucher does when it is not for this purspose…

Do I have a mistake in understanding?

You need to enter the liability you have like creditors, capital etc… then your tempo account will be zero.

you need a trial balance before you enter the data.

your company trial balance will show you what are balances and all. it should be balance. mean Cr side and Dr side mush be equal.
Hope you find something here.

How do I enter trial balance?

There are no liabilities, no loans etc.
100USD is the money the company owns its equity, there’s nothing more.

You need to make a journal entry except customer , creditor and stock balances
For customer and creditor, you need to use opening invoice tool
For stock you need stock reconciliation.
you need to make the corresponding balances to tempo account.
Your tempo account should be zero after you did all.

Can you please refer to my simple example with 100USD on the bank account?

What shall I do?

You have only one side , then bank Dr and tempo Cr
Then you need the other side
like you brought this 100 to your company or may be you borrow
then if you brought to company from your own pocket then
tempo Dr
Capital Cr
Then your tempo get zero

If you borrowed
Creditor Cr
tempo Dr

this is how it works.

nope, this is just assets the company owns from last year. Books for 2020 are closed, final equity is 100USD. no loans etc., its what is owned by the company.

Now trying to move to ERPNext with 2021, with starting equity of 100USD.

So then
Bank Dr 100
Capital or Equity Cr 100


I think you’re correct. :partying_face:
I was to much bumping my head against the temporal account :sweat_smile:

Thanks a lot for your patience