Recording dividends paid out

[John Ralls]

> On Feb 22, 2015, at 2:57 PM, Ron Stone <ronstone at ncf.ca> wrote:
> 
> Thank you John,
> 
> I’m learning as I go along and not sure what, in practical terms, is involved in flushing income and expenses to retained earnings - but you’ve confirmed that I am on the right track. Can you explain the steps involved in setting up Retained Earnings correctly?

Just create an Equity account named Retained Earnings: On the Accounts page click the new button, name the account Retained Earnings, set the parent to Equity in the selector hierarchy and set the type to EQUITY.

The easy way to flush income and expenses to Retained Earnings is to use Tools>Close Book and select Equity:Retained Earnings for both the Income Total and Expense Total list boxes. One typically does this once per year at the close of the accounting period, and it’s best done on a date on which there are no other transactions as the close book entries confuse some of the reports.

Regards,
John Ralls