Guides · Bookkeeping
Opening and closing balance
Opening and closing balance are the bookends of an accounting period. The opening balance is where an account starts the period; the closing balance is where it ends — and it becomes the next period's opening.
How one becomes the next
An account's closing balance for one period carries forward to become its opening balance for the next. The chain is continuous: this month's close is next month's start, so the balances flow unbroken from one period to another.
That is why an error in a closing balance does not stay contained — it is inherited by the next period as a wrong opening.
Why the carry-forward has to be right
Because balances carry forward, getting the closing figure right matters beyond the current period. A supplier or customer balance closed wrong starts the next period wrong, and the mistake compounds until it is traced back.
Clean carry-forward is what lets a business trust its opening figures instead of re-verifying history every period.
How Lekha carries balances forward
Lekha keeps a running position per party from the recorded bills and payments, so a party's balance flows from one period to the next without being re-keyed and re-checked each time.
Lekha records what your documents say and tracks the money on both sides — what you owe and what you are owed. It records and tracks; it does not replace your accountant.
Questions
- What is an opening balance?
- The balance an account starts a period with — carried forward from the previous period's closing balance.
- What is a closing balance?
- The balance an account ends a period with. It carries forward to become the next period's opening balance.
- Why does the closing balance matter beyond this period?
- Because it becomes next period's opening. A wrong close starts the next period wrong, and the error compounds until it is traced back.