How do I move the net profit amount to retained earnings?

1

How do I move the net profit amount to retained earnings? Using V 24.2.29.1336 cloud.
Thank you!

2

It is included in Retained Earnings automatically when you move to new year

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3

Thank you!

4

Agree

Not sure I agree with this, as the entry occurs at the time of the transaction.

Manager is a continuous accounting system so the start of a financial year automatically has Balance Sheet values from the end of the prior financial year. Retained earnings is a Balance sheet account so Retained earnings start of financial year value is also set by design from the end of the prior financial year.

5

@Patch is correct. Retained earnings are reduced by distributions to capital accounts or owner’s equity with a journal entry. Or they can be the source of dividends paid to shareholders.

Retained earnings is the net of all profits, drawings, and dividends since the inception of the business. In non-accountant terms, it is everything the business ever made less everything ever paid out to owners. In a sole proprietorship, it is synonymous with owner’s equity.

6

Just to add a little bit more elaborate explanation of retained earnings is at What is retained earnings? | AccountingCoach

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7

Thank you for your replies! Turns out I had a brief attack of senility! All is well!

8

Alternative is to enable monthly closings.

9

That is contrary to Manager’s most fundamental underlying concept, @Rolder.

10

So how would you be able to do that related to all your balance sheet items and for example spreading payments from assets such as insurance? I fully agree with @Tut that this is not part of how Manager or any accounting software should function.

11

Balance sheet accounts do not have an impact on P/L or retained earnings.
Earning are calculated on the P/L accounts
The program should be able to assign earnings on any moment as required by the user
Even in the middle of a month…

12

I am confused, whenever something changes in P&L that affects net profit then retained earnings change with them. You can also generate P&L reports at any day and time. There is nothing you do yourself the accounts automatically remain balanced. So not sure what you are asking.

13

You are wrong here also. When you distribute retained earnings to shareholders then it reduces the retained earnings and increases capital accounts.

14

Very simple.
Retained earnings is the result of the P/L
Normally is is posted (by the system) to current retained earnings account
This account on its turn is emptied out at year end and moved to ytd retained earnings.
If you run a P/L statement, yes you can the the profit (month or ytd) but the balance sheet does not show the right amount…

15

Yes of course. If you post another sales invoice your balance changes as well.
I can dream up hundreds of scenarios that changes the balance sheet…

16

To which concept are you referring to?

17

I already tried to explain that Manager at all times when something changes in P&L it will also change the Net Profit/Loss and simultaneously the Retained Earnings account in the Balance Sheet.

18

I was referring to

I tried to explain that Retained Earning are in the Equity section of the Balance Sheet and refer to the amount of profit the business has left after paying all its direct costs, indirect costs, income taxes (Net Profit/Loss in P&L) and its distribution (dividends) to shareholders. Shareholders can based on policies and agreements draw or contribute (or whatever capital subaccount(s) you created) and thereby reduce or increase the Retained Earnings.

19

I’ll check what you are saying…

20

I was referring to your immediately preceding comment in post #8 that an “Alternative is to enable monthly closings.” Manager does not make use of monthly (or any other) closings, because it is a perpetual accounting system. Therefore, closings can be neither enabled nor disabled. It also was not clear what that had to do with the subject of this thread—moving net profit to Retained earnings, since that happens automatically and continuously.

With that statement, you refer to a procedure that is not appropriate with a perpetual accounting system. The balance of the Retained earnings account is always inception-to-date. If you want to empty the account at any point, you must distribute the earnings in some fashion, either through payouts or to capital or other equity accounts. If you did that routinely at year-end, the Retained earnings account would effectively become year-to-date retained earnings. But it would still technically remain an inception-to-date balance.