Integrating Profit and Loss Report into a set of books and the trial balance

Adrien Monteleone adrien.monteleone at gmail.com
Tue Mar 6 18:32:28 EST 2018


> On Mar 6, 2018, at 11:11 AM, Stan Brown <the_stan_brown at fastmail.fm> wrote:
> 
> On Tue, Mar 6, 2018, at 10:13 AM, jcnw wrote:
>> I am setting up a set of books for a small church and need to run a month
>> profit and loss report.
>> How do I enter the Net Income for the Period into the books so it shows up
>> in the balance sheet?
>> I have set up the books with Income, Expense, Asset and Liability accounts.
>> Do I need to set up a P&L account.
>> Thanks for help and consideration
>> John
> 
> 
> Closing the books will do that.
> 
> But you may not want to close the books monthly. Instead you may want to run an income statement for each month, and not close the books till the end of the year. 
> 
> The tutorial concepts guide has more about this. It caused me to change my accounting period from a month to a year, and specify start and end dates for each month's income statement.
> 
> When you run a balance sheet as of a particular date, the total of income minus expenses is automatically placed on the balance sheet, in a category called retained earnings, so you don't have to do anything to compute it. 
> 
> However, the Retained Earnings in the balance sheet does not pay attention to the accounting period. Say your accounting period is monthly and you close the books at the end of the year (as I do). When you run a balance sheet as of 31 January, the Retained Earnings figure shown is of course the net income for January. But when you run a balance sheet as of 28 February, Retained earnings is the total of the two months January and February, in a single number. In other words, Retained Earnings is always the total of income minus expenses since the last time you closed the books.

Which brings up a use case for never running ‘close book.’

If you never close, it doesn’t matter what date the Balance Sheet is run for, it will always present the proper Retained Earnings calculation as of that date.

Regards,
Adrien

>  
> 
> By contrast, the income statement does respect the dates you set on Edit » Report Options.  (I think that's the right menu option; I don't have the software on this computer.)
> 
> -- 
> Stan Brown
> the_stan_brown at fastmail.fm
> http://BrownMath.com
> http://OakRoadSystems.com/
> 
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