Opening and closing balance
Opening balance
The opening balance is the amount of money a business starts with at the beginning of the , usually the first day of the month:
opening balance = closing balance of the previous period
If there is no previous period, then the opening balance will be zero.
For example:
closing balance for January = £5,650
therefore
opening balance for February = £5,650
Closing balance
The closing balance is the amount of money the business has at the end of the reporting period, usually the last day of the month:
closing balance = net cash flow + opening balance
For example:
net cash flow = £2,550
opening balance = £5,650
£2,550 + £5,650 = £8,200
therefore
closing balance = £8,200
