Michael I don't think we are attempting to give accounting advice per se. GnuCash has two ways of dealing with retained earnings:
1 Formal book closure operation in which income and expenses are closed to an equity account which is most often referred to as Retained Earnings and from which disbursements of the capital (with the associated entries to the Assewt accounts). 2 Calculation of Retained Earnings in reports with no closure process to equity with all transactions retained in the temporary accounts. Christian's original question pertained to the requirement in Denmark for a balance statements and a statement of results. I would identify these with the GnuCash Balance Statement and either the Income Statement and the Profit and Loss Reports. He will of course have to check whether these standard reports meet his jurisdictional requirements. In his reply Adrien raised the issue of an Opening Balance for Retained Earnings when transferring from another program or when creating a new book and transferring balances from an existing book and whether this was possible in GnuCash (creating the entry) and it is this issue I was specifically addressing. The point I was making is that if you have entered the Opening Balances for all Asset and Liability accounts from a previous set of books with corresponding entries to Opening balances in Equity in a new book/file, the equity entries implicitly include any retained earnings balance from the previous book and there is no necessity to have a Retained Earnings balance carried forward from the previous book/file. This is a matter of the fundamental process of accounting, independent of any matters pertaining to any specific jurisdiction, although jurisdictional practice may introduce further complications on top of this and independent of whether a formal closure process is used or simply the reliance on the report calculations. Any accounting program will have to be compliant with this to meet the fundamental requirements of any accounting system set out in the Fundamental Accounting equation or its extended version. I am very confident that GnuCash has this implemented properly and meets this requirement. The new Account heirarchy, at least in some of the options (I think in the Business Features option) creates a Retained Earnings account and quite correctly sets its value to zero and that value cannot be edited in the setup process. Any user can of course create an opening transaction to that account manually. Again I am making the point that in the specific circumstances where only the Asset and Liability account balances with the appropriate entries to equity have been transferred to a new book such an entry to Retained Earnings is neither necessary or required and manually creating one, if not done carefully with appropriate adjustments to the Opening Balance values, will result in the new book/file starting balances not correctly reflecting the balances of the old book/file at the end of its use. The intention is not to advise anyone of how a corporation should be accounted for in a specific jurisdiction, but is to reassure Christian and other users that GnuCash is operating in accordance with the fundamental principles of accounting practice that apply in all jurisdictions and has the flexibility to implement manually any specific jurisdictional requirements. We will on occasions have to venture into what such requirements may be to ensure that they can be implemented. Any suggestions made should of course be checked with a qualified practitioner in the jurisdiction in question and not relied on as specific advice. Perhaps this needs to be a general disclaimer on all and any posts to the list (and possibly already is). While this is also not a discussion list for formal accounting procedures per se, it is impossible to discuss GnuCash's operation totally independently of those formal fundamental requirements that are common to any and all jurisdictions. For the record I hold a Masters degree in accounting but I am not a registered practitioner in Australia (additionally required to offer professional advice to the public). I have done the accounting for some business operations in the past - currently retired). That is less relevant though than what the accepted core fundamentals of all accounting systems world wide are and the implications of them. I am posting the above summary to clarify at least my perception of what was being addressed which sometimes gets lost in the individual posts when we get a little bit sidetracked on side issues from the original OP's question. David ----- David Cousens -- Sent from: http://gnucash.1415818.n4.nabble.com/GnuCash-User-f1415819.html _______________________________________________ gnucash-user mailing list [email protected] To update your subscription preferences or to unsubscribe: https://lists.gnucash.org/mailman/listinfo/gnucash-user If you are using Nabble or Gmane, please see https://wiki.gnucash.org/wiki/Mailing_Lists for more information. ----- Please remember to CC this list on all your replies. You can do this by using Reply-To-List or Reply-All.
