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

[David Cousens]

Christopher,

In another post on this thread in reply to Mike Novak's reply  to an earlier
post I outlined how Equity:Retained Earnings is generally used in accounting
theory and the distinction between contributed capital and earned capital
usually made in corporate accounting. The Retained Earnings is the nett
*operating* income as you suggest (usually separate from any income from
financing activities of a company. This clear separation is perhaps really
only essential for corporate structures where there is a legal separation of
the liabilities of the shareholder from the liabilities of the business
although other business users (partneships, sole traders) may want to
provide a similar degree of separation for their management purposes.

Do you know if GnuCash has a flag indicating whether the books have been
closed formally or is just the presence or absence of the closing
transactions used to detect this?  

If the books are not formally closed then it is obviously difficult to
reflect the transfer between earned capital and contributed capital that
occurs when dividends are paid or money is reinvested in the business unless
the accounts specifically affecting retained earnings can be specified,
perhaps in the options?  Not all credit splits to equity for example will
reflect such transfers as there are likely to be transactions involving the
share capital (splitting, buy backs etc) which don't affect Retained
Earnings.

David



-----
David Cousens
--
Sent from: http://gnucash.1415818.n4.nabble.com/GnuCash-User-f1415819.html