How to transfer Year End Profit or Loss to the Balance Sheet?
At the start of a new year, you normally transfer the old year's net profit or loss to a balance sheet account. Before this is done, a trial balance printed for the new year shows the relevant amount. SunSystems automatically prints a line, 'Total Prior Year's Profit/Loss', immediately before the report totals.
Once you have reconciled and confirmed this value the transfer is carried out as follows:
Ensure you have a profit and loss account called, for example, Prior Year Profit/Loss. This account should not have an account code within the range normally included on any financial reports. This is required for system technical reasons.
Create your balance sheet account called, for example, Retained Earnings, which forms part of the balance sheet.
Print a Trial Balance for the first period in the new year, and note the amount called prior year's net profit/loss.
If the trial balance shows a profit, use Ledger Entry to debit the profit and loss account and credit the balance sheet account with this amount. If you are posting a loss, reverse these signs. Post this journal to the last period of the old year.
The profit and loss entry is ignored in the new year's trial balance, but the balance sheet entry is included.
This method assumes that SunSystems financial statements, analysis and tables are used for reporting.
An alternate method is to zeroise the profit and loss accounts by posting a journal to each of the P&L accounts using the trial balance as a journal voucher and using the Retained Earnings accont for the corresponding balance sheet account in the conventional way.