[GNC] Net Income & Retained Earnings do not match

[Michael or Penny Novack]

On 2/14/2023 12:14 PM, John Wilson wrote:
> I have set up a new set of books by exporting a tree of accounts from 
> 2022, the old books, to 2023 the new books.
>
> In the old books the Net Income in my P&L report matched the Retained 
> Earnings in my Balance Sheet report but it doesn't in my new set of 
> books.
>
> Is this 'a bug' or have I done something to my tree of accounts? 


Ignoring the immediate cause that has been pointed out, there is a 
misunderstanding of what "net income" (or loss) on a P&L mean relative 
to "retained earnings" on a Balance Sheet. By which I mean OVER TIME and 
assuming that most users of gnucash will NOT be doing a "close the 
books: operation.

Net Earnings (or loss) on a P&L are fro the period of the P&L (a P&L is 
always for some date interval)

Retained Earnings on the Balance Sheet (always as of some specific date) 
is the net going back to when the books were opened (or reopened 
following a "close the books"

In other words, if you started with gnucash at the start of 2021 and you 
ran a P&L for that year and a Balance Sheet as of year end of 2021 you 
would expect net income (for 2021) and "retained earnings" to match. 
Then at the end of 2022 you again run a P&L for 2022 and a Balance Sheet 
for year end you will again have a "net income" (or loss) for 2022 and 
this will NOT match "retained earnings" << which will be the sum of the 
earnings retained in 2021 and 2022.

If you DO a "close the books" this will not happen. At the end of a 
"close the books" all the temporary accounts of type income and expense 
will be zero and their net (the profit or loss) included in equity and 
so no longer "retained".

Michael D Novack