What do you mean by opening entry in accounting?

In the case of continuing business we are required to pass an entry in the journal for bringing in the new books all assets and liabilities as appearing in the books on the last day of the previous year. This entry is known as ‘opening entry’. Rule of passing opening entry is to debit each asset account; credit each liability account; excess of debits over credits represents capital balance. Thus if in a question capital balance is not given it can be ascertained as follows:

Total debits – Total credits = Capital


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