[GNC] When closing books, equity statement report is incorrect

[Quinn Wood]

On Sun, Oct 22, 2023 at 9:59 AM Michael or Penny Novack <
stepbystepfarm at comcast.net> wrote:

> Sorry, but this isn't really a gnucash question.
>
> By which I mean if you knew how to do this (by the standards of your
> jurisdiction) were the books being kept the old fashioned way, pen and
> ink on paper, you would have little difficulty doing it with the books
> being kept using gnucash. The "retained earnings" (or "losses" shown by
> gnucash in the Balance sheet are for a VIRTUAL account representing the
> UNCLOSED income and expense accounts.
>
> It looks like you would be wanting to use explicit accounts (in equity)
> which you can do by closing the books the old fashioned way (ignore the
> gnucash "close the books" tool).


On Sun, Oct 22, 2023 at 11:48 AM Adrien Monteleone <
adrien.monteleone at lusfiber.net> wrote:

> The GnuCash workflow doesn't include 'closing the books'.
>
> That function was added by request, but it is entirely optional.



I need to do three things after a given financial reporting period:
* produce a report that communicates revenues and expenses over the period
* produce a report that communicates the final balances at the end of the
period
* produce a report that communicates any changes in shareholder equity that
occurred over the period

It looks like I can accomplish the first two things with the built-in
Income Statement and Balance Sheet reports without doing any kind of
closing process (built-in or manual) so that works fine. For the third
objective, I believe the Equity Statement report will pick up on net income
(or loss) as well as capital investments even if I refrain from closing the
books, so that works fine too. To finish up the third objective, how would
I enter a dividend into the GnuCash so it shows up on the report? If I was
using an explicit account, I would probably choose to debit Retained
Earnings equity account and credit a Dividends Payable liability account to
declare a dividend. In this case where I'm sticking with the virtual
Retained Earnings (or Losses) account, I believe I won't be able to do that.

Thanks for the explanation about the virtual accounts, good stuff to know.
Let me know if I'm missing something with this last bit.