Balance Sheet and Retained Earnings

[Mike or Penny Novack]

On 12/18/2016 11:34 AM, Buddha Buck wrote:
> On Sun, Dec 18, 2016 at 10:34 AM replicon <replicon at gmail.com> wrote:
>
> However, closing your income/expense accounts will typically make the 
> income statement (or profit and loss statement, or statement of 
> revenues and expenses, or whatever it's called in your jurisdiction) 
> less useful, as it reports the change in balances in the accounts 
> between two points in time. If you report from just after closing the 
> books last period to just after closing the books this period, the 
> income statement will report 0 income and 0 expenses. 

Since few gnucash users are doing a "close the books" it might be well 
to describe the "work flow" for those who will be doing that.

1) At the end of the accounting period, run the Income Statement 
(whatever that is titled, according to the type of entity)
2) Perform "close the books"
3) Run the Balance Sheet  < you will have the Balance Sheet as of the 
start of this accounting period from the last time you this >

That is just like the old "pen and ink on paper" where the various 
income and expense accounts are first closed into the "Profit and Loss" 
account and that closed (into Equity by whatever will bring it into 
balance) and then the Balance Sheet produced.

BTW --- it is before this that the adjustment transactions would have 
been entered. In other words, after that last of the actual "business" 
transactions. SOME organizations use a special calendar, a day that 
isn't a real day, falling after Dec 31st and before Jan 1st. The various 
adjustment and closing transactions would be assigned to this special 
fiscal date. But of course that requires an in house date verification 
program << so it wouldn't consider that date an "invalid date" error. I 
used to work at a place that did that. >>