[GNC] Handling of Equity and Retained Earnings

[Christian Lynbech]

Inspired by a recent discussion I would like to understand better how to handle the Retained Earnings equity sub account, as I am new to both Gnucash and accounting.

In a world where books are closed at year end, I would understand Retained Earnings as sort of the surplus of the year that is then added to the equity so one starts the next year with a higher equity than the year before.

When using Gnucash the recommended way of just keep going, there is not any real need to distinguish the year end result, it just goes into the rolling development of the accounts.

However, at least here in Denmark, it is required for a company to produce a statement of balance and result, how could one handle that? Just make a report at year end that extracts the relevant numbers or simulate the closing of the books by moving the appropriate amount to Retained Earnings and then move it out again when the new year starts up?

/Christian