If you are coming to Ambrook from previous accounting software, one of the first things you may want to do is get your balance sheet setup and matched with what you had in the previous year. In practice this means:
Reconciling Bank Accounts and Credit Cards
Importing Open Invoices and Bills
Uploading Assets
Entering Loan Accounts
Reconciling Equity Accounts
All these steps are optional, but doing them will ensure you have robust and accurate books in Ambrook.
Reconciling Accounts
When Ambrook connects to your bank and credit cards, the system may pull in anywhere between 1-month and 2-years of data, depending on the preference and capabilities of your bank or credit card company. When you first connect your accounts to Ambrook we recommend:
Reviewing your ledger to make sure there are transactions that go back to the beginning of the year, or whenever you plan to start your books in Ambrook..
Reconciling your accounts through the current year to make sure there are no missing transactions.
Doing this will make sure all your taxable eligible transactions are in the system and your bank accounts are showing the correct amounts on your balance sheet
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Importing Open Invoices and Bills
In Ambrook, Accounts Receivable (AR) and Accounts Payable (AP) are system accounts, which means the balances are managed automatically in the platform. The only way to change the balances on these accounts are to create or match payments to Bills or Invoices.
If you have an existing balance of AR or AP from previous platforms, there are two options for importing these accounts to Ambrook:
Import individual bills and invoices - This requires recreating all bills and invoices that were unpaid when you switched to Ambrook. You can do this by creating each record in Ambrook manually or using the Import Spreadsheet which can be downloaded from the Bills or Invoices pages.
Create a lump sum bill or invoice - This process just requires creating one bill and/or invoice in the amount of the open AP or AR balance you want represented on Ambrook. Optionally, you can create line items and tag them with the incomes or expenses you would want to see on accrual basis income statements.
Regardless of which import process you choose, having the balances on Ambrook in the form of bills and invoices will allow you to match payments made against those open items that post in your Ambrook Ledger. This will help you maintain accurate books on both a cash and accrual basis.
Uploading Assets
Representing all your assets on the balance sheet is important for a full picture if you want to calculate financial metrics such as Return on Assets. Moreover, you may want to track claimed tax depreciation on your balance sheet to have a sense of what is available to you at the end of the year to minimize your tax liability. If you have a tax accountant they likely track this information in their own software, but it’s still necessary to have a complete balance sheet.
To get your assets on to Ambrook we recommend utilizing the Depreciation Schedule from your most recent tax filings. On this you will find:
An itemized list of your depreciable fixed assets with a purchase date and a cost basis
The amount of tax depreciation claimed on each of your assets.
Typically, people set up a balance sheet account for each asset, at the cost basis, and then one account for Accumulated Depreciation, which adds up the total depreciation claimed across all assets. Variations on this structure, such as grouping assets up by type (Vehicles, Equipment, Structures, etc) can also be used.
Once you have your existing assets on Ambrook, the most important thing to do is remember to add new accounts when you make purchases over the year. You can then use that information to update your tax depreciation schedule. To purchase a new asset you can follow the steps outlined in this article.
Entering Loan Accounts
Having the ability to see all your loan balances, in real time and on one platform, is one of the primary benefits of keeping your books up to date. To do this on Ambrook you should gather your loan statements for the year and:
Identify the opening balance at the beginning of your books in Ambrook.
Create a balance sheet account for the loan and enter the opening date and opening balance information.
Use your loan statements to identify all the payment transactions on your ledger. Be sure to identify how much of each payment went to principal versus interest by creating line items.
Tag the principal portion of your payments to your loan accounts using the “Record to Liability” option in the tagger.
Tag the interest portions with an expense category.
Once you have taken these steps, you can review the current balances of your loans by going to the Balances tab on Ambrook.
Reconciling Equity Accounts
Once your assets and liabilities have been entered into Ambrook, what remains is your equity accounts. If you have equity accounts from your previous bookkeeping, you should create them using the New Balance Sheet Account button and setting the opening balance and dates to match.
Ambrook also has system accounts in the equity section including:
Opening Balance Equity - The sum of all the opening balances on your other balance sheet accounts.
Retained Earnings - The sum of all the net income on the company’s P&L prior to the current fiscal year
Net Income - The sum of all the net income on the company’s P&L in the current fiscal year.
Often, when you first set up your account on a new platform, there will be Opening Balance Equity - due to the balance sheet accounts you created - and Retained Earnings from the historical data on your connected accounts. Both Opening Balance Equity and Retained Earnings can be found at the bottom of your Balance Sheet statement, on the Accounting tab, in the Equity section.
To clear the Opening Balance Equity you should create a custom journal entry with a credit in the amount of balance showing (or a debit if the number is positive). Typically, the other account on the journal entry will be Retained Earnings.
If, after you take these steps, your Retained Earnings account is not at the balance you expect, we recommend reaching out to our support team for a call to help finish setting up your balance sheet.
Troubleshooting
What if the balances of my connected accounts look wrong? This can happen normally when you have pending deposits or withdrawals in your bank accounts that have not been posted to your bank account yet, so if you see a slight discrepancy here it may not require any action. If the balance of a connected account looks materially wrong you should reconcile the account to see if there are any missing transactions. If you’ve reconciled and things still look wrong, reach out to our support team.
What if I enter the wrong opening balance or date on a manual account? These are editable by clicking on the account for details, and scrolling to the bottom of the page. You can adjust the opening date and balance of a manual account at any time.
Why do I set the opening balance for accounts to zero when creating new assets and liabilities? When you create a new account on Ambrook there are typically a series of transactions around that event. For example, if you purchased a vehicle, there should be a withdrawal on your bank account or a new liability created for a loan. Your balance sheet accounts should get their values from those transactions, as opposed to having an opening balance set, which creates Opening Balance Equity. If you aren’t sure that you are accounting for assets or liabilities correctly, we recommend getting in touch with an accountant.
What does the “direction” mean when I’m creating an account? You only need to worry about the “Direction” field if you’re creating an account that has a negative balance, like Accumulated Depreciation. In double entry bookkeeping different account types are either “debit normal” or “credit normal”. The type of normal for an account determines how debits and credits on a journal entry impact the balance. For a debit normal, debits increase the balance and credits decrease it. For a credit normal account the inverse is true. For more information on account normals read here.