Using Retained Earnings Account to Track Changes in Prior Years
At the end of each fiscal year, QuickBooks® automatically “closes the year” and posts Net Income to the Retained Earnings account. QuickBooks adjusts income and expense accounts at year-end to zero them. The Net Income shown as of 12/31/X1 will transfer into Retained Earnings as the date rolls to 1/1/X2. Retained Earnings is the account used to accumulate Net Income and Net Loss over the life of the business. Each new fiscal year starts with a net income of zero.
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Editor’s Note: This is the ninth in a series of 10 tips on improving your productivity in QuickBooks. A new tip will be posted each Wednesday on Intuit® Accountants News Central under “Ways to Be More Productive.”