Business: accounting for dividends
Graham Leggett
minfrin at sharp.fm
Sun Oct 12 19:11:35 EDT 2008
Jeremy Miller wrote:
> Not exactly. Dividends is a temporary equity account that is also
> closed at the end of the year. So you'll want to do something like this:
>
> 12/31 (or date dividends are declared if earlier)
> Dividends 10000
> Dividends Payable - Joe 2000
> Dividends Payable - Susan 3000
> Dividends Payable - William 5000
>
> 12/31 (or date of closing)
> Retained Earnings 10000
> Dividends 10000
>
> The process of closing typically goes:
>
> Close income and expense accounts to Income Summary
> Close Income Summary to Retained Earnings
> Close Dividends to Retained Earnings
>
> Once you close Dividends to Retained Earnings by debiting R.E. and
> crediting Dividends, you should be good to go.
In the case of gnucash, there is no explicit retained earnings account,
this is calculated automatically. This allows you to follow on your
accounts without the need to zero everything out at the end of the year.
If there was a way to automatically handle the zeroing out of dividends
it would be ideal, but first one would have to figure out the correct
accounting way to handle it.
Right now I suppose you could kludge it by creating a final balance
sheet for tax purposes, and then adding an extra transaction to zero out
the dividends account. The problem with this is that you cannot recreate
the balance sheet for a previous year, which might raise eyebrows if
audited and you haven't versioned your gnucash file somehow.
Regards,
Graham
--
-------------- next part --------------
A non-text attachment was scrubbed...
Name: smime.p7s
Type: application/x-pkcs7-signature
Size: 3287 bytes
Desc: S/MIME Cryptographic Signature
Url : http://lists.gnucash.org/pipermail/gnucash-user/attachments/20081013/987bd58c/attachment.bin
More information about the gnucash-user
mailing list