Net Income missing from Balance Sheet

Brian Levy brian.levy.esq at rogers.com
Tue Dec 2 20:41:16 EST 2008


Dividends are a reduction of: 1st current year earnings and profits that is
different from either retained earnings or current year profits and if paid
out in usually show as a contra account in the equity or capital section of
the balance sheet and not as an expense item that would reduce current year
profits.

If a US company, the M-2 reconciliation would show the dividends paid out.
As a working paper each you you need to compute E&P and retain the working
paper as it is not part of the accounting system but a tax calculation.  


Jannick Asmus wrote:
> 
> Charles,
> 
> On 08.07.2008 00:39, Charles Day wrote:
>> On Mon, Jul 7, 2008 at 2:10 PM, Jannick Asmus <jannick.news at gmail.com 
>> <mailto:jannick.news at gmail.com>> wrote:
>> 
>>     On 07.07.2008 22:49, Tony Nelson wrote:
>> 
>>         Yes it is different than Retained Earnings.
>> 
>> 
>>     I agree.
>> 
>> 
>>         Both QuickBooks and GnuCash show the same "Retained Earnings"
>>         amount,
>>         which relects historic retained earnings through the end of the
>>         prior
>>         fiscal year.
>> 
>>         GnuCash, does not show a line item for Net Income, which is the
>>         earnings
>>         for the present fiscal year to date (at least that is what it is
>>         with
>>         QuickBooks).
>> 
>> 
>>     I believe that GnuCash comprises net income in retained earnings.
>> 
>> 
>> Yes, the GnuCash balance sheet's Retained Earnings line includes income 
>> during the period. If Quickbooks shows Net Income on the balance sheet, 
>> then where on the balance sheet does it show what amount of Net Income 
>> has been paid out as dividends (as opposed to retained)?
>> 
>> I thought that retained earnings in period = net income - dividends 
>> paid, so if you show net income on the balance sheet then you would have 
>> to show a subtraction for dividends paid as well.
> 
> Net income is the company's result of the present fiscal year to date as 
> Tony has pointed out above.
> 
> Net income of the prior fiscal period and dividends to be paid are to be 
> agreed upon by the stakeholder's meeting in general; I expect it like 
> that in most of the countries. Dividends are financed by withdrawal from 
> (sub-accounts) of equity. Hence we can think of prior year's net income 
> as fully retained and dividends as completely financed from earnings 
> retained before (!) their distribution.
> 
> Note that dividends paid in year 05, say, can exceed net income of year
> 04.
> 
>> Cheers,
>> Charles
> 
> Best wishes,
> J.
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