[GNC] GNC Equity and Retained Earnings not tracking together?

[Michael or Penny Novack]

This question MAY require delving into "accounting for corporations when 
using gnucash". It may be that for corporations, the usual process of 
not closing the books and having gnucash showing a VIRTUAL account 
"retained earnings" isn't going to work well for corporations << where 
dividends paid out of earnings and dividends representing a return of 
capital are treated differently >>

It has been far too many years (decades) since I looked at an 
"accounting for corporations" text. We need an accountant here, then 
first describe what is needed were it being done the old fashioned way 
(pen and ink on paper) and THEN seeing how we get gnucash to model that.

Michael D Novack


On 3/9/2020 9:44 PM, David Cousens wrote:
> Brian,
>
> Brian the Retained Earnings is a component of the total Equity of the
> business that records what the operation of the business has contributed to
> the Equity. When a distribution is paid it is paid out of Equity and if it
> is debited to the Shareholder Distributions and credited to the Asset:Bank
> account then it has decreased the Equity appropriately. If you were to also
> debit it from Equity:Retained Earnings what is the other account for the
> debit side of the transaction? You will have decreased the equity twice for
> the one distribution to the shareholders and Retained Earnings will no
> longer reflect the operational contribution to the Equity of the business.
> The shareholder distribution is not part of the operational aspect of the
> business but a part of its capital/financing structure.
>
> David Cousens
>
>
>
> -----
> David Cousens
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There is no possibility of social justice on a dead planet except the equality of the grave.