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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