Retained Earnings

I have noticed on my Balance Sheet that my Assets do not equal my Liabilities.   The error seems to be in Retained Earnings.

My Retained Earnings changed from May 31, 2016  (my year end), to June 1, 2016 (start of my new year).

How do I find what happened?

  • When you rollover a fiscal year end all of the income and expenses accounts are zeroed out and the balance added to the retained earnings for prior years. This would be an equity account. Assets equal Liabilities plus Equity. If this is not a fact on your Balance Sheet then check your data integrity from the Maintenance menu and correct the error. 

  • I have checked May 31,17 Income Statement Net Income + May 31, 17 Balance Sheet Retained Earnings - when I add them together they do not equal what is sitting in Retained Earnings come June 1, 17.

    Can you explain fully how I check this "data integrity" - I cannot seem to find where I go for this.  We are a 3 user system.  Just need more instructions.   Thank you

  • When you produce an income statement the total Revenues minus the total Expenses will give you the Net Income. This amount may be positive or negative.

    The Net Revenue amount is the same as the Current Earnings in the Equity Section of the Balance Sheet as at the the same date. Your Income Statement, Net Income dated May 31, 2017 must be the same as the Balance Sheet for May 31, 2017 Current Earnings. This is one of the basic points of bookkeeping.

    Then on June 1, 2017 (a new fiscal year) the Income Statement would have a Net Revenue amount of Zero unless entries had been made dated June 1, 2017. All revenue and expense accounts are cleared when you change the date to the new fiscal year ready to accept the entries for the new fiscal year.

    On the Balance Sheet the Current Earnings account becomes zero as at June 1, 2017, again, unless entries are made dated June 1, 2017. The amount that was in the Current Earnings account for the prior year is now a part of the Retained Earnings, Prior Years.

    These transaction all happen 'automatically' within the program just by moving from one fiscal year to the next fiscal year. Because of this action the account Current Earnings is a fixed number with an account type of X. You cannot change the Current Earnings account.

    To check the integrity of the accounts go to the Maintenance Menu on the Home Page and near the bottom of the drop down menu there is Check Data Integrity. Click on this and a new window will open which will check to see if your controlled accounts are in balance with the respective sub ledger entries. The message will be quite clear at the bottom of the window and if there is a problem an asterisk will be next to the accounts that have a concern. The source of the error should be determined and corrected before moving ahead.

    I hope this helps.