[GNC] Handling of Equity and Retained Earnings

[Adrien Monteleone]

Someone moving from another application or from paper *would* have a non-zero Retained Earnings account that would *not* be reflected in the opening balances of the Asset or Liabilities accounts.

The balance of that account would have been the result of closing Income and Expenses in previous years.

In fact, I don’t see how carrying the Asset and Liabilities balances would even overall balance, without Retained Earnings. (or any other special Equity accounts, like “Owner’s Equity” or stock accounts, which may have previously existed in the books with carry-over balances)

Yes, you’d create the following:

Dr. Equity:Opening Balances
Cr. Equity:Retained Earnings

Just as was done with the Asset and Liability accounts.

There is no need to carry over all of the Income and Expense accounts. They are zero anyway since those old books were closed.

Now, if such a person wanted to *start from scratch* with GnuCash, then no, they wouldn’t need such an account.

Regards,
Adrien


> On Jan 15, 2020 w3d15, at 3:32 PM, David Cousens <davidcousens at bigpond.com> wrote:
> 
> Adrien and Christian,
> 
> Just a comment on Adrien's last post. There is no need to have an opening
> balance for Retained Earnings. Any opening balance would be reflected in the
> Equity entries when you enter the opening balances for the Asset and
> Liability accounts (in a new book the Income and Expense Accounts should all
> have zero balances) in the new book. If you wanted to create an opening
> balance for Retained Earnings it would have to have Equity:Opening Balances
> as the transfer account to maintain the correct balances carried forward.
> The details of past Retained Earnings are recorded in the old book and
> unless you also transferred all the transactions to retained earnings as
> well your new book is not really going to contain any useful information you
> would need to carry forward.
> 
> David Cousens