During year end our
support center is flooded with calls regarding what users need to do to get the
P&L accounts to roll into the retained earnings account. This tech note will
outline everything you should know about how Data Plus handles the Retained
Earnings account.
During year end, the
booking of Profit/Loss to Retained Earnings is automatically done by the system
when the last period has been closed. If the year has been closed and adjusting
entries need to be made to the previous year, you may post to EY and the system
will automatically roll forward the balance into retained earnings.
How does
the system know what accounts to roll into retained earnings?
The system uses the Account Classifications
under File Maintenance > Chart of Accounts to determine which type of
accounts to zero out and post to retained earnings. Below is a list of each
Account Classification and an explanation of how accounts with each
classification will be handled at the end of the year.
Asset (A) An account classified as
‘Asset’ will have its balance rolled forward at Close Year, and retained earnings
will not be affected.
Balance Sheet (B) An account classified as
‘Balance Sheet’ will have its balance rolled forward at Close Year, and
retained earnings will not be affected.
Liability (L) An account classified as
‘Liability’ will have its balance rolled forward at Close Year, and retained
earnings will not be affected.
Expense (E) An account classified as
‘Expense’ will have its balance zeroed out at Close Year, and the balance will
be transferred to the Retained Earnings account.
Profit / Loss (P) An account classified as
‘Profit / Loss’ will have its balance zeroed out at Close Year, and the balance
will be transferred to the Retained Earnings account.
Revenue (R) An account classified as
‘Revenue’ will have its balance zeroed out at Close Year, and the balance will
be transferred to the Retained Earnings account.
Statistic (S) An account classified as ‘Statistic’ will have its balance zeroed out at Close Year, but Retained Earnings will NOT be affected.
Accounts with Classifications of ‘A’, ‘B’, ‘L’,
or ‘S’ will not post to retained
earnings.
Accounts with Classifications of ‘P’, ‘R’, and
‘E’ will zero out and post to retained
earnings.
The system adds the total of the ‘P’, ‘R’, and
‘E’ class accounts to determine the profit or loss amount. It then books this
amount to the Retained Earnings account specified in parameters. The offsetting
entries are made to each account with classes of ‘P’, ‘R’ and ‘E’. These
entries bring the account balances to zero. All entries are posted into a
period ‘SY’ (Start Year).
After closing the last period of the year,
print the Closing Entries report under Yearly Reports to see the entries booked
by the system.
NOTE: Entries to Profit/Loss, Revenue, or
Expense accounts which are posted back into a year AFTER it has been closed
automatically adjust the retained earnings account and keeps the starting value
of the income/expense account at zero.
For further information on what other steps should be done during the close year process, view the technical note in the System Technical Note section of our website, entitled ‘Checklist for End of Year’.
If you have further questions, please
visit our website www.dphs.com OR contact
Data Plus Support.