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Opening Balance

Why is there no date associated with the Opening Balance for an account?


How can Moneywiz calculate a correct Net Worth over a particular period without knowing the Opening Balance date?



Thanks


 Hi Terence,


MoneyWiz starts calculating when you enter your first transaction. Obviously such transaction has a date. Hence the opening balance was set on the same date when the first transaction in the account was registered. Let's say today is 1st of Jan 2015, and you have $1000 on your card. You create an Account in MoneyWiz and set opening balance as $1000. Then you register a transaction for $100. Now today is 16th of July., and let's say you forgot what was your opening balance (and you don't know how to check it in MoneyWiz). You go to that account and see that the first transaction there has $100 paid for it and you see what was the balance of your account after this transaction was made. So you just add back this $100 to the balance of the account, that was just after that transaction, and that's how you get your opening balance for that date.


So if you change the opening balance in MoneyWiz, it will start calculation from the very first transaction registered in that account.


I hope you follow... :)

So,


If you add an account of say $5000 on the 01 July 2015 and don't add any transactions on what date is the $5000 entered into your net worth?


My question is about the net worth chart in the reports section where you can enter dates and ask for a chart between two dates.


How can this report produce a correct chart when it does not know the opening balance date?


An added comment.


My account may be a savings account with $5000 with the opening balance dated 01 July 2014 but I have just purchased MoneyWiz and created the account. I want to be able to see my net worth via. the net worth report for the 2 July 2014. How do I do that as MoneyWiz does not have any record of the 01 July 2014 because I have not entered another transaction?



There is no need for the opening balance to have an actual physical date. As you have noticed, the opening balance doesn't appear as a transaction in the transactions list (you may be used to seeing it that way, that's why I'm mentioning it). As Vladimir explained, when you add a transaction, MoneyWiz will calculate this transaction as 'newer' to the opening balance, no matter how old it is. Additionally, if you enter one transaction that's 1 day old and then you enter another that is 1 month old, MoneyWiz will still consider the opening balance to be the 'oldest' state of this account. 


In the case where you don't have any transactions in the account and you need to see reports, MoneyWiz will display the balance as of the starting date of the report. The reports in MoneyWiz allow you to set custom start and end date or choose from predefined options. Each of those option would define specific start and end dates and the reports would only calculate within those boundaries. 


Let's continue with your example. So you have an account with opening balance $5000. When you created this account is irrelevant. You don't have any transactions in it. 

If you run a report for this month for example, it will have a start date 01 July 2015. Since there are no transactions, as of 01 July 2015 the balance is $5000 as it is for the entire report period. 

So the report will show a flat horizontal line on the $5000 mark. And that is probably true. 


If you run a report for another period - say 200 years ago - from 01 July 1815 to 31 December 1815. Again since there are no transactions in this account, the balance between these two date is considered to be $5000, so the report will show a flat horizontal line on the $5000 mark. Now that is probably not true. However, since you don't want to enter transactions before 01 July 2015, you can probably say that the history of your account before this date is not important for you. 


So your net worth on the 02 July 2015 will include these $5000 from the savings account even if you don't have any transactions in it. 

I'm not exactly sure where the confusion comes from though, because the line on the chart seems clear. I will make a guess, but please ignore if it's not that. The net worth chart does show information points - if you tap on different places on the graphic, you will see date and net worth for this date. MoneyWiz shows these only for the moment of your financial history where something changes. Each transaction changes something, but the fact that's new day doesn't. So if you don't have any transaction for the 02 July 2015, you will not see such information point for this date, but also the line will be flat around it. Meaning that whatever your net worth was on the previous information point, it is still the same, as nothing changed. 

Thank you for your response.


I understand all that you say however this part of your reply I think shows a limitation of Moneywiz when you import all your accounts from another product.


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If you run a report for another period - say 200 years ago - from 01 July 1815 to 31 December 1815. Again since there are no transactions in this account, the balance between these two date is considered to be $5000, so the report will show a flat horizontal line on the $5000 mark. Now that is probably not true. However, since you don't want to enter transactions before 01 July 2015, you can probably say that the history of your account before this date is not important for you.

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This is the point I was trying to make. The report between two dates can be incorrect because you do not use the date of the Opening Balance, it is also assumed to be the date of the first transaction entered and again this can clearly provide the wrong information in the Net Worth report.


If I have imported my accounts from another product and it has an account starting the 1 January 2014 and its first transaction is the 1 January 2015 then a net worth report from the 1 January 2013 to 1 January 2016 would be incorrect with the information it provides being misleading.


I think you either need to have a date for the Opening Balance or limit your net worth reporting to simply the total of your accounts today.


Thanks



Aha, I see your point now - you are importing from another product and are used to the way things were/are done in it. 

That's not a problem, however, because you can do a dated opening balance transaction in MoneyWiz too. You're just not obligated to.


If you open your account with balance 0, import your transactions that are exported from the other product, and if the opening balance transaction was exported, this transaction will be imported in MoneyWiz during the import. Even if it is not exported though, you can create one and set any date you want. If in the future, you decide that you want to import a bunch of even older transactions, all you need to do is change the date of this transaction. 


You are not limited to using a dated opening balance transaction, but the software can't tell you that you should not, if that is indeed what you need and how you want to look at things. 

Additionally, you're not obligated to set the opening balance as a 0. You can set any number that you want and create a dated opening balance transaction. This way before the opening balance transaction date the balance will be the number you entered for opening balance of the account, and after this date it will be a calculated balance that includes your opening balance transaction.


We just don't have a special transaction type to call "opening balance", but you can always appropriate an expense or an income transaction. Just write for description "Opening balance" and set proper amount and date. 

I have already determined that a work around is to create your own opening balance transaction and place 0.00 in the MoneyWiz Opening Balance, in this way the chart in the net worth report is correct.


However, if you do not do this you get an incorrect Net Worth Report Chart in MoneyWiz if you import transactions that are dated before the account was created in MoneyWiz.


It would be wise to point this out in your documentation if you do not intend to have a dated opening balance.


All the best


Terry

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