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

[Quinn Wood]

On Sun, Oct 22, 2023 at 1:42 PM Adrien Monteleone <
adrien.monteleone at lusfiber.net> wrote:

>  From the GnuCash website:
>
> "GnuCash is personal and small-business financial-accounting software..."
>

I will note that "small" in terms of revenue, assets, staff, or owners is
arbitrary, so I'll focus on trying to extract the intended meaning behind
"small business." Neither sole proprietorships, partnerships, nor
disregarded entities have the ability to retain earnings. (Households don't
really use the phrase "retained earnings" while doing their own bookkeeping
either, they'd probably call it something like "discretionary spending
money.") The only use case where retained earnings comes into play is when
performing bookkeeping for a business that is taxed separately from its
owners. This could be a single-owner LLC that has elected to be taxed as a
corporation or a multinational public corporation that has elected to be
taxed as a corporation. Jurisdictions outside the US may have dissimilar
approaches to financial accounting, but I can't comment on them due to lack
of familiarity.

It seems to me the most straightforward way for businesses that can retain
earnings to use GnuCash to track retained earnings and profit passed on to
owners is to
* close books (manually or using the built-in tool based on which method
they prefer), and
* use a "changes in equity" report that correctly disregards closing
entries and/or journal entries that shouldn't be interpreted as investments
or withdrawals of capital

The answer to my original question is that the existing Equity Statement
report doesn't achieve what I'm going after. I don't have much experience
with reports, but I want to try my hand at creating one that does.