"Statement of Changes in Equity"... Bug? Or Feature?

Why are entries carried over, from each period to the next, on the “Statement of Changes in Equity” report? Is this a bug? Intentional? The only way it can be done? Or am I just incorrectly using the “description” in my transactions?

Here are some visual aids…



My first observation is that you are opening and closing income summaries for each accounting period, you are misusing the program. Manager is a perpetual accounting system that eliminates the need for this. See https://www.manager.io/guides/7470.

Second, nothing can really be determined by looking at the reports. Post the following screen shots:

  1. The definition (Edit) screen for your 1997 report.
  2. The results of drilling down by clicking on the hyphen on the 1996 Q1 Draw line on the 1997 report.
  3. Your chart of accounts from the Settings tab.

I fail to see what choosing-to-use-the-program-differently-than-you-would has to do with the repetitive/non-current entries this report is generating… but I guess I’ll play along.



Sure. And in a multi-member LLC you’ll need to allocate profits to each member at the close of the year, according to their interest percentage (or however else determined). The transactions that are performed, are described in the very link you provided. Sooo… ??



It’s actually pretty clear. In the initial period, several entries were made that involved Equity accounts (initial and additional contributions, distributing profits, etc). The first report is fine. For the following year, new transactions occurred under Equity. Those showed up correctly on the “Changes in Equity”, but the actions from the previous year (highlighted in yellow) also carried over and showed up on the statement as well. A third report was generated on the first day of year three, where nothing had yet occurred in the period, but all the actions from the prior two years (again, highlighted) remained on the statement.



Again, I fail to see what any of these things have to do with the standard output of this particular report (and how these entries are being carried over). But…

  1. It’s a default report. Nothing is modified but the date (1/1/97 - 1/1/97).
  2. There are no transactions when viewing the “1996 Q1 Draw” line. Which, there shouldn’t be. This is a 1997 report. The 96Q1 draws, obviously, would’ve taken place in 1996. They appear, as they should, on the 96 statement. This is the whole point of this thread, and why this looks like a bug.
  3. This really isn’t related to the issue at all. It’s a very basic chart with some minor renaming (nothing complex or hachet-y).

Tick the box ‘exclude zero balances’ in the reports.

Yeah, that’s an inexact way of eliminating the carried over transactions (which I’ve considered), but it also removes useful zero balances (like the period’s beginning balances), and it doesn’t treat the underlying issue.



Eventually, over many years’ transactions, you could have an accumulation of dozens of unrelated entries showing up in the Equity report. The only way around that, is to use very generic, categorical descriptions for the transactions. That way, they all fold into one another under one description. But then you lose the ability to truly describe the transaction. “1996 Initial Contribution: Property” would become “Contribution”. And all such transactions would be described as “Contribution”, whether they were initial or additional, property or cash, or came from Member A or B.

Since it seems no one else is able to justify why entries would be carried over on a “Changes In Equity” statement, perhaps @lubos can weigh in? Is this the only way to output the data? Or should the report be filtering to the period specified (and it’s not for whatever reason)?

You did not receive answers because instead of providing information requested for troubleshooting, you disputed its necessity and argued with a fundamental design premise of the program (perpetual accounting). No one has access to your accounting data, so no one can help until you furnish necessary information. Others are not seeing this problem, so its cause seems to lie with the way you are using the program.

If you furnish the information requested, we’ll do our best to help.

Sit this one out, @Tut. I’ll wait to see if @lubos has anything to add.

The way this report works is that transaction description turns into “sub-category” under the account.

For example, under Members' Equity, you have sub-categories such as Share of Profits: 1995 or 1996 Q1 Draw. My intention was that descriptions shouldn’t contain period names. This way these categories would be “re-used” year after year which is useful if generating this report across multiple periods. You can compare Share of Profits side by side.

So that was my initial thinking.

In practice, I found out nobody is ever consistent with descriptions and the result is what you see on the report. I think the solution is to introduce some sort of “sub-account” system for equity accounts. You’d select sub-accounts up-front such as Drawings or Share of Profit and then when entering transactions into equity accounts, Manager would prompt you to select sub-account too.

Also, it seems like you are tracking member balances manually? You should use Capital Accounts tab to track individual member balances. You’d get another report called Capital Accounts Summary which would summarize movements across individual member accounts.

if it is planned to implement sub-account please consider implementing the below in the reports.
first level will be capital accounts, second level will be owners, third level will be sub account ( capital, drawing, fund and others)

the report should be presented to show the ending balance per owner and the owner balance should the net off the ending per sub-account

Apologies for the late reply… tax season and whatnot.


I agree. That does seem useful, to compare the amounts across various periods, and not just the changes during a single time frame.


The descriptions/subcategories wouldn’t be an issue, if the report was filtering for the right entries (based on the date range). As it stands, it’s almost as if the report is defaulting to a comparative column format (even on single column reports) and including empty values (and the corresponding transactions) for comparison (when there’s no comparison being made).

Meanwhile, the “General Ledger Transactions” report is able to correctly filter for those very same entries based on the date. So is there a reason why the filtering acts differently on the “Statement of Changes in Equity”?


What issue is this referring to (the first sentence, specifically)?

As the included reports above in the OP show, this was just a demo company “Test LLC”. The setup wasn’t all that complicated. Perhaps there’s some confusion caused by the two renamed equity accounts.

Either way, I’m not sure how the included reports would indicate “tracking member balances manually” (I’m also not aware of what that would entail exactly), since the “Statement of Changes in Equity” will only include the transactions that involve the capital accounts (which you believe aren’t being used).

And perhaps I’m missing something, but the Capital Accounts tab doesn’t include much functionality. You can add/edit a capital account, check the balance, and see the transactions. Is there something else to be done there?

To simulate what I’ve done (aside from the superficial renaming of accounts), here are the steps to reproduce:

  1. Start with a new test business.
  2. Customize by adding the “Capital Accounts”, the “Receipts & Payments”, and either the “Cash” or “Bank” account tabs.
  3. Create a money account (either cash or bank depending on what tab you chose to add).
  4. Add a capital account for (at least) one partner.
  5. Enter a receipt for $50, on 12/12/18, credited to a capital account’s “funds contributed” sub-account.
  6. Run a “Statement of Changes in Equity” report for 2018. Everything looks fine.
  7. Run a “Statement of Changes in Equity” report for 2019. The action you entered in step 5 appears in the 2019 report, when it should only be appearing in 2018.

@PoolBoy @lubos The following suggestion will not fix the issue of carryover entries appearing (or indeed carry-back entries appearing), but it will make the reports more meaningful.

When creating the Profit allocation (distribution) journals, date the journal on the last day of the year instead of the first day of the next year. This will allow the distributions for the period of the report to display in the report. Examples below:

It also makes the report more meaningful when the “Exclude Zero Balances” is selected.

The other criticism I would make of the report is that it states individual members’ equity transactions as nil ( - ) when in fact it is not.

image

This is because the report is a statement of changes. Your screen shot of the Capital Accounts includes current balance.

I apologize @Tut I should have posted the listing screen for the Capital account of Nat Citizen. Here it is:

What I am trying to highlight is that the profit distribution amount(s) should be attributed to the members if they are listed in the report in this way. Otherwise the members should not appear, in this way, in the report at all.

Now I understand your point, @AJD.