QuickBooks Retained Earnings And The Fiscal Year End

In QuickBooks Desktop, the fiscal year is determined when you create the company file. Any income or expenses recorded during any prior fiscal year will show their money amounts and balances in the account called “retained earnings”. This is an account that QuickBooks puts into your chart of accounts to display the accumulated net income from all prior fiscal years. If you change the dates on any report from before to after the any fiscal year end, then the balances of income and expenses will be moved to the retained earnings account. You cannot post transactions to retained earnings, it just serves the function of displaying all prior years accumulated net income in any report after the fiscal year end. You can change the fiscal year end date from the “my company” window. You should keep the fiscal year end and the tax year the same.
This KZbin owner’s equity playlist will show you everything you need to know about owner’s equity. Owner’s Equity in QuickBooks and QuickBooks Online involve equity transactions and owner’s equity accounts, in order to properly show the true amount of ownership claim or ownership rights an owner has in a company using QuickBooks desktop or QuickBooks online. I’m happy to show you what is owner’s equity and what the official definition of equity really means. After you are clear in the explanation of owner’s equity ideas, you will learn about the owners’ equity accounts in any company’s general ledger. You will learn, in the QuickBooks desktop or online chart of accounts, the equity type of accounts that both will automatically put in your chart of accounts. In QuickBooks desktop, the equity accounts given depend on the company type. In QuickBooks online however, the default equity accounts depend on your subscription level. You will always have in either: opening balance equity, retained earnings and the equivalent of owner’s capital investment and owner’s withdrawals. All the other equity accounts will be added based on any changes you make. I will help you learn how to make owner’s equity transactions like investing cash and assets or withdrawing owner’s draws or dividends in any cash or asset form. The playlist will show you all about monthly equity adjustments such as: distributing partnership income, closing the books, closing entries and income summary adjustments. Watching this QuickBooks equity course will give you everything you need to know about owner’s equity. Please watch all videos to know how to record all owner-related transactions where money or assets are coming to or from the owner as capital investment or owner’s withdrawals like dividends if it’s a corporation. Once you understand owner’s equity ideas and equity-related concepts, everything else in basic accounting is easy.
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#quickbooksequity #quickbooksretainedearnings, #quickbooksfiscalyear

[@worldwidequickbooks]

Thank you, all my friends, for the lovely complements!! I’m happy to help everyone understand what happens in QuickBooks desktop on at the end of each fiscal year. Any income and expense account balances will be transferred to the retained earnings account. That’s a special account that only shows up in reports. It shows the prior fiscal years accumulated net income or loss. If you change the date of any report, you will see the change in retained earnings. That’s the idea. I hope you will “like” after watching each one and I hope you will subscribe. -Mark

[@ericahoxie8028]

Thank you so much for this video. I’ve taking years of accounting and didn’t really get RE. But I got an “aha moment” after watching this video🙏🙏🙏

[@worldwidequickbooks]

I'm so glad it helped you and I appreciate you telling me I have videos for everything and I hope you will click like after watching each one and subscribe to help support the free channel. I'm here if you need anything else Mark

[@gamematerials]

Thank you so much, it is a great understandable explanation, I have been looking to solve this issue for while .

[@worldwidequickbooks]

I'm very glad it helped you. You can click in the top right corner to see the full playlist of owner's equity for any other Equity issue you might need. I hope you will click like after watching each one and subscribe to help support the free channel for everyone. Mark

[@joeytam5097]

Thank you so much!!! you solved my problem!

[@worldwidequickbooks]

I'm very glad it helped and I hope you will click like after watching each video and subscribe to support the free help channel for everyone Mark

[@iamintractable1805]

Thank you for this video. It's the first one that provides the right explanation. I do still struggle with one facet of this "Retained" earnings that I hope you can clarify. I feel like retained earnings is supposed to reflect money that is still connected to the business but perhaps is just supposed to show how much was left after liabilities and expenses are met.For example, after my first year (2019) I showed retained earnings of 39K. But that is not what I would call “Retained” because much of it was distributed. So I did not really retain 39K after you factor in distributions. To correct for this I have been adding a journal entry to balance the distributions against the retained earnings. So on 1/1/2020 I correct the retained earnings what was actually still connected to the business.I am just not sure if this is the correct approach or if I am trying to make Quickbooks into Quicken so that reports show what I want when I don't need to be doing that all. Any guidance you can provide would be greatly appreciated.

[@worldwidequickbooks]

I can't read all that. Please 2-3 sentances per question and try to be brief and clear. I will be happy to help you.

[@iamintractable1805]

@@worldwidequickbooks I was unable to separate the sentences when I posted. The length provides enough context so that you can understand the question. Distilling this down, do I need to apply journal entries in order to reduce the value in retained earnings to reflect the funds actually left in the business. The word "Retained" implies the business is still in possession of the funds which in the example above is not the case.

[@worldwidequickbooks]

@@iamintractable1805 Thank you but you are mistaken about having retained earnings reflect the funds left in the business. There are many many reasons why retained earnings would not be equal to the funds left in the business. I can reccomend an intro to acocunting video playlist and then that may help you undewrstand. You should also get the "college accounting" by jefry Slater". It's the best book to self-teach accounting Ideas -Mark

[@iamintractable1805]

@@worldwidequickbooks I watched your videos but your examples did not help me reach a conclusion related to my questions. In my case, the Retained Earnings do not reflect distributions as I outlined in the first post. Its just the money left over after expenses and liabilities. The profit in a given year. Seems like that is the intention so perhaps I don't understand its use from an accounting perspective. You're not my first stop as I have looked for clears answers for a while. Your video on it was the first that laid it out very well. I will check out the book.

[@worldwidequickbooks]

@@iamintractable1805 I'm sure that will clear things up

[@azharali-pg8ik]

Thank you teacher :)

[@worldwidequickbooks]

You are most welcome I hope you will click like after watching each video and if you need any other topic you can go to the Main channel page or just ask and I will send you the link. Mark

[@ishcon9966]

Thanks Mark

[@worldwidequickbooks]

gald to help, I hope you click "like"

[@Nenita1923]

Hi - what else is needed to close the year end? Is there a need to do some journal entries? Can you share me the step by step to close the year end? Thanks.

[@worldwidequickbooks]

Yes and yes If you click in the top right corner of this video you'll get the link to the full equity playlist Watch each video in proper order.And you will see the answer to your question and how everything fits together Yes , you do have to make closing entries and that is shown in one of the videos on the playlist Mark

[@raekc4839]

My 2020 tax return has a negative retained earnings balance. I've just set up my Quickbooks desktop account and have all my 2021 transactions but don't know how to enter my existing retained earnings from 12/31/2020. Do I do that with a journal entry?

[@worldwidequickbooks]

You don't enter retained earnings as part of a journal entry this video explains that retained earnings is simply the result of the difference between your income and expenses from prior fiscal years. If you want to enter what the previous retained earnings was you could make a separate equity account called "previous retained earnings" and put the negative amount of equity as a debit balance in there. Please note that journal entry should be part of the opening balance journal entry when you set up your company with starting balances. You should watch this playlist and it will tell you all the ideas about the set up journal entry. kzbin.info/www/bejne/iH-2pX1vjrajq9U You can also click on the top right of this video to get the rest of the videos in this equity playlist and if you watch them in proper order you will understand the ideas better and you will know what to do. -Mark

[@AlteredBoot]

I hope you can help me as I cannot seem to find information on this anywhere. I'm set up as a corporation (independent contractor). I just finished my first fiscal year and about to file a return. However, I have made some early installment payments. One for last year, and I started making quarterly installments for this year. This is leaving 2 unmatched Bank Transactions as I don't know how to record this in Quicken Online. I understand this to be tricky as it potentially affects the Net earnings if I don't do it right. Somewhere I heard "Retained Earnings" being part of it so I ended up here. How do I record installments? How do I record my final payment or refund? It seems all avenues of internet searching focuses on sales tax or payroll tax. However I don't have a problem here as I have the Quickbooks add-ons (for payroll). Please and Thanks. FYI, I'm Canadian however I expect the accounting principles to be the same.

[@worldwidequickbooks]

Thank you but it is not possible to understand what your issue is from your text. It may seem to you that you explained it because you know the situation. I found the most time consuming and challanging thing about helping people with quickbooks is understanding what their issue is. Most people, for some reason, us etheir own words instead of the actual words in order to try to explain their issue. Sometimes they tell me things that are not relevant becuse they don't know and it makes it harder to find out what's really going on. You can send me an email if you would like to do a half hour consulting live. [e-mail]

[@AlteredBoot]

​@@worldwidequickbooks Thanks for replying. I'll try rewording here first as I believe this to be a gap in the general information found online and it may benefit others. Simply put: 1. What is the correct way to record corporate income tax payment in quickbooks? 2. What is the correct way to record an advance installment corporate income tax payment in quickbooks? To be clear, I'm not referring to Payroll Tax or Sales Tax. thanks.

[@worldwidequickbooks]

Thank you for the clarification. It seems that you ar eefering to INCOME tax, federal and state. When you say "installments", you mean the quarterly estimated income tax payments. If this is the case, then you should use the checks window and record the payments as: Income tax expense" . It's that easy. That's acually what it is. If later, you get a refund for that same tax year, then you simply make a journla entry to decrease the income tax expense. Please let me know if that was the issue. -Mark

[@AlteredBoot]

@@worldwidequickbooks Yes that was it Thank you. I was expecting it to be a bit more complex.