Retained earnings on the balance sheet. Retained earnings are... Nuances of interaction with shareholders

Retained earnings (RE) is a common accounting concept that many businesses encounter. This term stands for funds received through economic activity the company and those available to it after payment of tax deductions, dividends, fines, etc. Simply put, all mandatory payments.

An alternative name for retained earnings is retained surplus. In some cases, the concept of “profit retention ratio” is used.

The main difference between retained earnings and net profit is that it is always calculated not only for a specific period, but also for the total life of the enterprise. Whereas net profit is determined only for the reporting period. But at the end of the year, which is logical, both indicators may be the same.

Retained earnings in the balance sheet relate to the passive part of funds. By default, it is believed that it should be distributed among the owners and used to optimize the company’s business model. Until this point, such profit can only be called the company’s debt to its owners. Refers to long-term sources of financing, therefore the goal of the company’s financial strategy should be its mandatory accumulation.

What to do with retained earnings

There are several main ways to refer an NP. Among them:

payment of dividends to owners/shareholders;
compensation for earlier losses;
accumulation of reserve fund funds;
other goals agreed upon by managers.

IMPORTANT! Regarding the last point, it is worth making a small clarification. Under the leadership of in this case This does not mean nominal officials, but the owners of the business. As a rule, they resolve such issues during the final annual meeting, at which the corresponding minutes are drawn up.

What determines the size of retained earnings?

In different reporting periods the indicator may differ. It is influenced by such things as:

the amount of dividends paid to the owners of the company;
change net profit;
increase or decrease in the value of commodity assets;
changes in overhead costs;
revision of tax rates;
change in the company's business strategy.

Retained earnings. Check

All NP for the past years is summarized in accounting account 84, the balance credit balance is placed in line 1370 of the balance sheet. The same line contains the amount of uncovered loss (if any), which is indicated in parentheses. Uncovered loss means the difference between the company's expenses and income during the year, according to which the first point exceeds the second.

The account contains information about the denomination and changes in the amount for the reporting year. At the end of the year, the amount is credited to account 84, while the loss is written off as a debit. The main task of this account is to store information about the purposes for which the funds were used.

An uncovered loss is sometimes called a deficit profit. The loss can be fully or partially compensated using reserve capital funds. In the case of compensation, data on the initial loss is not filled in (in case of partial compensation, only the remaining amount of the loss is indicated in parentheses).

IMPORTANT! At the request of the accounting department, additional lines – 1371 and 1372 – can be entered in the balance sheet to differentiate the figures for the reporting and previous years.

Calculation of retained earnings. Detailed Formula

So, we found out that retained earnings are the amount of funds remaining at the disposal of the company’s owners after all taxes and other mandatory deductions. This indicator can be calculated using the formula:

HPk = HPn + ChP – D

PE – net profit minus income tax;

Note: The standard reporting period is one year.

If during the current period the company received a net loss instead of profit, the formula takes on a slightly different form:

NPk = NPn – CHU – D

HPc – surplus of funds at the end of the reporting period;
HPn – the same indicator at the beginning of the period;
NL – net loss;
D – dividends distributed for the reporting period, based on the RR of the previous periods.

The remaining indicators are similar to the previous formula.

Keep your balance. Rational allocation of NP funds

It is believed that scaling the business should be a priority goal when determining where retained earnings will go. Proper reinvestment can increase the overall profitability of a business and the stock market value of its shares. Which, in turn, will be a major advantage for investors. Banal payment of dividends is good only in the short term, while progressive development creates the potential for stable long-term earnings. If the company does not grow, investors will not see this potential and will want to increase dividends now, which is not desirable from a financial point of view for the company itself.

On the other hand, even taking into account the logic of the above, discussions often arise between the directorate and the management department of the enterprise regarding where to direct retained earnings.

If management is opposed to allocating funds to pay dividends and wants to use them exclusively for the implementation of new projects, shareholders may decide to sell shares.

As a result, the company's stock quotes will decline, as will its market capitalization.

Therefore, it is important for financial management to adhere to the so-called golden mean, providing investors with the profitability they expect, and at the same time directing funds to the development of the company.

Investments from the amount of retained earnings are often directed to the purchase of new equipment, marketing research, technology improvement and other items on which the further competitiveness and financial success of the business largely depends.

Making a profit is the goal of creating any Russian commercial company. After taxation, there remains retained earnings (hereinafter also referred to as NP), which the owners of the company can distribute for certain needs at their discretion (for example, for dividends in proportion to shares in the authorized capital), and also accumulate on its accounts. From the beginning of the company’s activities, IR is accumulated on an accrual basis. Such profit is the net profit of the enterprise. Retained earnings from previous years are taken into account in the balance sheet of the enterprise according to accounting data.

retained earnings

There are several options for distributing such profits. They are regulated by the norms of the relevant legislative acts Russian Federation.

For example, the distribution of profits to participants or shareholders or investment in the authorized capital of the relevant company is regulated by:

for LLC - paragraphs. 7 paragraph 2 art. 33, paragraph 1, art. 18 of the Law of 02/08/1998 N 14-FZ “On LLC”;
for JSC - paragraphs. 11.1 clause 1 art. 48, paragraph 5 of Art. 28 of the Law of December 26, 1995 N 208-FZ “On JSC”.

There are other options for using NP.

In accounting, NP is accumulated on Account 84.

Analytical accounting of NP must be maintained in such a way that the relevant information is generated depending on the chosen option for using the funds.

Retained earnings from previous years in the balance sheet

The corresponding amount is reflected in the balance sheet.

The compilation of reporting concludes the company’s summing up of results for the reporting period.

The need to submit a balance sheet and its form are established by clause 1 of Art. 14 of the Law on Accounting dated December 6, 2011 N 402-FZ and Appendix 1 to the Order of the Ministry of Finance dated July 2, 2010 No. 66n, respectively.

For small enterprises (with certain exceptions), the form of the balance sheet and report is contained in Appendix 5 to the above Order of the Ministry of Finance of the Russian Federation.

Example of reflection in the balance sheet:

According to account 84 in LLC NP (including previous years) amounted to one hundred thousand rubles.

In 2016, at the general meeting it was decided to allocate fifty percent of net profit to dividends.

The operation is documented by posting: Debit 84 Credit 75 - 50,000 rubles.

In the balance sheet for 2016, the corresponding line reflects the amount of 50,000 rubles.

It is important to take into account that in the Russian Federation there are no restrictions on the direction of dividends from NP of previous years, because in practice there may be no net profit for the reporting year. If, according to the balance sheet, there is such profit from previous years and the company decides to distribute it as dividends without creating special funds for this, then such payments are subject to income tax (Letter of the Ministry of Finance of the Russian Federation dated October 5, 2011 N ED-4-3/16389 @ ).

It is also important to understand that the NP is transferred to the balance sheet according to account 84, namely the balance on the loan of account 84 is transferred to the corresponding balance line.

If the company incurs a loss in the reporting period, it is automatically compensated by the positive indicator of such NP from previous years.

Annual reports, including a balance sheet, a statement of financial results and an explanatory note, must be submitted before the expiration of three months after the end of the reporting year (clause 5, clause 1, article 23 of the Tax Code of the Russian Federation).

Failure to submit on time will result in penalties:

for an organization - a fine of 200 rubles (tax sanction);
for an official of an enterprise - a fine in the range from three hundred to five hundred rubles (administrative sanction).

Definition

retained earnings(uncovered loss) – the final financial result of the company’s activities for the reporting year, one of the components of liabilities, i.e. the company’s sources of funds, included in the “Capital and Reserves” section of the Balance Sheet.

Retained earnings represent the company's profit for the reporting year minus income tax, dividends, penalties for violation of tax laws and other expenses at the expense of profits (clause 83 of the Regulations on accounting and financial reporting in the Russian Federation, approved by Order of the Ministry of Finance of the Russian Federation dated July 29, 1998 N 34n).

An uncovered loss is a company's loss for the reporting year that is not covered by relevant sources.

How is retained earnings (uncovered loss) formed and used?

Also, the net profit indicator decreases when:

Increasing the authorized capital at the expense of retained earnings;

Direction of retained earnings to the reserve fund.

The use of retained earnings for expenses, for example, as a source of capital investments, is reflected only in analytical accounting by reserving the corresponding amount in a special subaccount (subaccount) of the account, for example:

Sub-account (sub-account) “Retained earnings (uncovered loss)”

Subaccount (subconto) “Use of retained earnings as a source of capital investments.”

The increase in the balance of uncovered loss, reflected in the debit of the account, occurs due to the reflection of the loss of the reporting year, which is debited to the account from account 99 “Profits and losses” with the final turnover of December of the reporting year

The indicator of uncovered loss increases the correction in the reporting period of significant errors of previous years made by companies that are not small enterprises, which led to an understatement of expenses in the period of errors (clause 1, clause 9, clause 14 of PBU 22/2010).

Repayment of uncovered losses from relevant sources is reflected in the credit of account 84 “Retained earnings (uncovered loss)” in correspondence with the accounts:

Retained earnings (uncovered loss): details for an accountant

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Issued 26,597 Liabilities Kt Retained earnings at the beginning of the reporting period 47 ... construction 5,495 Liabilities Kt Retained earnings at the beginning of the reporting period 5 ... reclamation) 133,429 Liabilities Kt Retained earnings at the beginning of the reporting period 480 ...
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99 (profits and losses) 84 (retained earnings) 404,366,857 Net profit... 99 (profits and losses) 84 (retained earnings) 43,776,000 Net profit... 99 (profits and losses) 84 (retained earnings) 9 000,000 Net profit... 99 (profit and loss) 84 (retained profit) 404,042,857 Net profit... 99 (profit and loss) 84 (retained profit) 404,366,857 Net profit...
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The accounting term “retained earnings formula” refers to the calculation of that part of an organization’s profit that remains on the balance sheet after payment to shareholders of all dividends due to them. This article clearly shows how to correctly calculate retained earnings, what affects it and for what purposes it is reasonable to spend it.

In conditions market economy it is important to constantly monitor how profitable a particular enterprise is. One of the key concepts for this is “retained earnings.” In economics and accounting, this is the common name for that part of a company’s profit that remains on the balance sheet after paying shareholders and investors all the bonuses due to them.

The right strategy for retained earnings determines how successful an organization will be, whether it will be able to compete in the market and whether it will attract new investors. The choice of ways to dispose of this amount is made by the owners and shareholders of the company.

It is important to constantly monitor how profitable the enterprise is

How to calculate retained earnings and why it is important to do so

This term refers to the field of accounting, however It is important for any businessman and entrepreneur to understand how to calculate retained earnings in the balance sheet. The fact is that knowledge of this indicator is necessary to understand how successfully the company is operating at a particular point in time, whether any significant changes are needed in its activities or structure, as well as how to plan further steps in business development.

Calculating retained earnings is quite simple. The calculation formula looks like this: the company's net income minus dividends paid to shareholders. This indicator is always calculated for the reporting period: month, quarter, half year, year.

To obtain total retained earnings, the calculated indicator for a certain period must be added to the similar result for the previous period. Comparison of the dynamics of retained earnings should also be a subject for analysis.

For example, it is known that the company’s net profit for the quarter amounted to 8 million rubles. In this case, shareholders need to pay 2.5 million rubles. Thus, it is easy to calculate retained earnings: 8 - 2.5 = 5.5 million rubles. It is known that for the previous quarter, net profit amounted to 4 million rubles. We calculate the total figure for two quarters: 4 + 5.5 = 9.5 million rubles.

To calculate the indicator more accurately, you should do two calculation options: before taxes and after taxes. All information necessary for calculations is contained in balance sheet in the section “Shareholder's share in the funds of the enterprise” (line 1370).

Comparison of the dynamics of retained earnings should also be a subject for analysis

What does this indicator depend on?

The amount of retained earnings depends on a number of indicators, some of which cannot be influenced in any way. The main characteristics are:

general dynamics of net profit;
amount of shareholder dividends;
changes in the cost of goods produced and services provided;
payment of taxes and other obligatory payments;
expenses for managing the enterprise and paying wages;
expenses for the development and promotion of the company.

What should funds from retained earnings be spent on?

Retained earnings belong to the liabilities of the enterprise- that is, to the totality of debts and obligations. Some economists argue that, ideally, the entire amount of funds remaining in a company's account as retained earnings should be divided between investors and shareholders.

However, there are some nuances to this issue. Of course, shareholders are interested in paying significant dividends and will be happy with bonuses in the form of additional income. At the same time, it is important for the company’s owners that the enterprise in which they have invested develops and generates even more income in the future. That is, theoretically, they may agree to use retained earnings for the development of the company, rather than divide them among themselves.

Planning for spending retained earnings must necessarily take place with the participation of investors. What is it reasonable to propose using these funds for?

Purchase of new equipment.
Renting new space and expanding the network of companies.
Hiring new employees.
Organization of franchising.
Repayment of debts and credit obligations.
Replenishment working capital companies.
Encouragement of high-quality employees of the company.
Reserve fund.

Shareholders are interested in paying significant dividends and will be pleased with bonuses in the form of additional income

Nuances of interaction with shareholders

As practice shows, determining the fate of retained earnings is usually a controversial and debatable decision. Some shareholders are interested in receiving maximum bonuses as quickly as possible and offer to divide all remaining funds.

Another part of investors is interested in the long-term development of the company and is ready to sacrifice short-term benefits for the sake of strategic interests and maximizing profits in the future. As a rule, the solution is a compromise solution. The main thing is to clearly and convincingly demonstrate to doubting investors that refusing to immediately pay all due dividends and investing them in development in the long term is much more profitable.

Thus, it is important to look for truly promising areas for investing retained earnings and present them to shareholders in a high-quality manner. It is also necessary to understand that the development of the company and the accumulated funds must constantly increase the amount of dividends received by shareholders, otherwise they may consider these investments useless and demand quick payment of all funds due.

Conclusion

The success of the company in the market and attracting new investors depends on the correct calculation of retained earnings and the choice of the right ways to allocate funds. Shareholders of the enterprise must understand the importance of new financial injections into the company. But for this, the development strategy needs to be presented well. Undoubtedly, it is necessary to monitor this indicator over time, since a reduction in profits, including retained earnings, indicates the need to adjust the company’s policy.

Purpose of the article: reflection of information about the undistributed financial result of the current year and previous years.
Line in the balance sheet: 1370.
Account numbers included in the line: account balance 84 (debit or credit).

At the end of the year, at the general meeting of the company’s shareholders or founders of the organization, a decision is made on the distribution of the company’s net profit. The part of the financial result that was not distributed among the participants is recognized as retained earnings of the current year. If the financial result is negative, information appears about the company's uncovered loss.

In the company's accounting, retained earnings or uncovered losses are recorded in account 84. It separately displays the undistributed financial results of the current year and previous periods for different subaccounts.

Note from the author! Account 84 is active-passive, so there can be a debit balance (the amount of the outstanding loss) and a credit balance (the amount of retained earnings), depending on the company's performance.

Line 1370 of the balance sheet belongs to the section Capital and reserves of the passive part of the balance sheet: the company’s own capital in terms of retained earnings is reflected here. Information for all years is summarized and displayed in one line. This line also records information about losses of the current year and previous periods that were not covered by relevant sources of financing.

Line 1370 - part of net profit not spent on the needs of the organization.

Note from the author! Net profit in accounting is understood as the final positive financial result of a company’s activities, which remains after the repayment of all obligations in terms of payment of mandatory taxes, fees, and insurance contributions to the budget.

According to the accounting rules, the financial result of the enterprise is displayed in Kt99. At the end of the year, a balance sheet reformation procedure is carried out (closing all main accounting accounts). One of the results of this procedure is the transfer of the balance from Kt99 to Dt84 in terms of undistributed income for this period.

Retained earnings can be spent on the following needs:

payment of dividends to shareholders or founders of the company;
increasing the size of the company's authorized capital (after official registration of changes in the constituent documentation);
creation of reserves: transfer of part of retained earnings to the company's reserve capital;
repayment of losses from previous years.

Note! During the year, there can be no movement on Dt84 without the decision of the company’s founders.

Uncovered loss

Losses as a result of the organization’s activities may arise in the following cases:

the company’s costs exceed the income received both from its main activities and from operations not related to its main financial and economic activities;
significant errors from previous reporting periods were identified;
adjustments have been made to the company's accounting policies.

Line 1370 of the balance sheet is a reflection of losses that were not covered by possible sources of financing. Data for previous periods and the current year are summarized.

Sources of loss coverage:

funds of the authorized capital: bringing the size of the authorized capital to the net assets of the company. The reduction of the authorized capital must be carried out within the limits established by law (the minimum threshold for public joint-stock companies is 100 thousand rubles, for non-public joint-stock companies and LLCs - 10 thousand.
Retained earnings - where can it be used and who makes the decision?
funds from the company's reserve fund;
targeted investment by the founders of the organization (contributions from the owners of the company that do not affect the distribution of shares and the amount of the authorized capital);
retained earnings from previous years.

Regulatory regulation

The use of account 84 to generate information about the presence of the company’s undistributed profit at the end of the year (the occurrence of an uncovered loss) is carried out in accordance with the Chart of Accounts and other regulatory documents.

Practical examples of accounting for retained earnings (uncovered loss)

Example 1

In 2017, revenue from the sale of goods of Solnyshko LLC amounted to 2 million rubles (excluding VAT). The cost of goods that were sold amounted to 1 million rubles (purchase from suppliers, transportation, etc.). Other costs of the company - 70 thousand rubles.

Business transactions

930 thousand rubles is the net profit of the LLC.

From the final financial result of the company, income tax was paid to the budget.

186 thousand rubles - settlements with the Federal Tax Service of Russia.

After carrying out the balance sheet reformation procedure, the following posting was made

744 thousand rubles - the retained profit of the company is displayed.

In the balance sheet of Solnyshko LLC at the end of 2017, line 1370 will contain the amount of 744 thousand rubles.

Example 2

As a result of the analysis of the financial and economic activities of the YAR company, a loss was identified based on the results of activities in 2017. The loss as of January 1, 2018 amounted to 40 thousand rubles. The founders of the company decided to cover the loss through their own targeted financing.

Business transactions

15 thousand rubles - cash contribution by the founders.

25 thousand rubles - transfer by the founders Money to the company's bank account.

40 thousand rubles - the loss is covered by targeted contributions from the founders.

Common entries for retained earnings (uncovered loss)

Balance reform procedure
Dt99 Kt84 - retained earnings.

Dt84 Kt99 - identification of uncovered losses.
Write-off of loss
Dt84 Kt84 - at the expense of income from previous periods.

Dt82 Kt84 - by means of the authorized capital.

Dt75 Kt84 - targeted financing of the founders.

Dt80 Kt84 - bringing the authorized capital to the value of net assets.

Questions and answers on the topic

No questions have been asked about the material yet, you have the opportunity to be the first to do so

Line 1370 “Retained earnings (uncovered loss)”

By line 1370 The amount of retained earnings or uncovered loss of the organization is reflected:

Interim reporting:

plus/minus

minus

(in terms of interim dividends accrued in the reporting period)

Annual reporting:

The amount of retained profit (uncovered loss) of the reporting period is equal to the amount of net profit (net loss) of the reporting period, i.e. profit (loss) after tax. Therefore, if the organization does not have retained earnings (uncovered loss) from previous years and the distribution of interim dividends during the reporting period, then the value of line 1370 coincides with the value of line 2400 “Net profit (loss) of the reporting period” of Form No. 2.

In a number of cases, an organization is obliged to make adjustments to balance sheet indicators during the inter-reporting period as of January 1 of the reporting year:

1. Retained earnings (uncovered loss) include the results of revaluation of intangible assets if:

the amount of depreciation of intangible assets exceeds the amount of its revaluation credited to the organization’s additional capital as a result of the revaluation carried out in previous reporting years;
intangible assets that were not previously undervalued are discounted;
intangible assets, which were previously discounted, are revalued and the amount of its writedown carried out in previous reporting years is charged to retained earnings (uncovered loss) in previous reporting years.

2. The amount of retained earnings (uncovered loss) is adjusted when the estimated values of intangible assets (i.e., the residual value of intangible assets) change:

in case of clarification of the useful life of intangible assets;
in case of clarification of the method of calculating depreciation for intangible assets.

Retained earnings (uncovered loss)

Retained earnings (uncovered loss) include the results of revaluation of fixed assets if:

an asset that was previously discounted is revalued and the amount of its depreciation carried out in previous reporting periods is charged to retained earnings (uncovered loss) in previous reporting years;
the amount of depreciation of an asset exceeds the amount of its revaluation credited to the organization’s additional capital as a result of the revaluation carried out in previous reporting years;
OS, which was not previously undervalued, is discounted.

4. The amount of retained earnings (uncovered loss) is adjusted when accounting policies change:

caused by changes in the legislation of the Russian Federation or regulations on accounting(except when otherwise provided by the relevant legislation or regulation);
in other cases, changes in accounting policies.

No adjustment is made to retained earnings if the monetary consequences of a change in accounting policy for periods prior to the reporting period cannot be estimated reliably.

5. Retained earnings (uncovered loss) include the results of recalculation of deferred tax assets and liabilities caused by changes in income tax rates in accordance with the legislation of the Russian Federation.

Remaining - retained earnings

Page 1

The balance of retained earnings is carried forward to the next year.

There may be a balance of retained earnings, which before its distribution is used in the turnover of the enterprise. If the company is unprofitable, then equity capital is reduced by the amount of losses received. A significant share in the composition of internal SOURCES is occupied by depreciation charges from used own fixed assets and intangible assets. They do not increase the amount of equity capital, but are a means of reinvesting it. Other forms of equity capital include income from the rental of property, settlements with founders, etc. They do not play a significant role in the formation of the enterprise’s equity capital.

Retained earnings from previous years shows the balance of retained earnings from previous reporting years.

The item Retained earnings from previous years records the balance of retained earnings from previous reporting periods.

The concept of retained earnings of an enterprise

Under the article: Retained earnings of previous years, the balance of retained earnings of previous years is given.

Line 460 Retained earnings from previous years shows the balance of retained earnings from previous reporting years.

Retained earnings from previous years (88 - 2) reflects the amount of the balance of retained earnings from previous reporting years.

As the results of the calculations show, the value of the bank's own funds during the analyzed period decreased by 2,071,894 rubles, which was mainly caused by a decrease in the balance of the bank's retained earnings by more than half.

When filling out the line, the data from account 88 Retained earnings (uncovered loss), subaccount 88 - 2 Retained earnings (uncovered loss) of previous years is used, the balance of retained earnings of previous reporting years is shown.

Let’s assume that the general meeting of shareholders at the end of the year decided: 30% of the company’s net profit remaining after paying taxes and the formation of funds (according to legislation and the charter) should be reinvested, 20% of the net profit should be used to pay dividends on ordinary voting shares, 50% of the net profit profits to be left as the balance of retained earnings.

The main source of replenishment of equity capital is the profit of the enterprise, through which accumulation, consumption and reserve funds are created. There may be a balance of retained earnings, which, before its distribution, is used in the turnover of the enterprise, as well as the issue of additional shares.

One of the most important subsections of the balance sheet, which analysts primarily pay attention to. According to regulatory documents in the balance sheet, the financial result of the reporting period is reflected as retained earnings (uncovered loss) of the current reporting period, minus taxes due from profits established in accordance with the legislation of the Russian Federation and other similar mandatory payments, including sanctions for non-compliance with tax rules. The enterprise must reflect in the balance sheet retained earnings (uncovered loss) of the reporting period, accumulated as a total from the beginning of the year. After the distribution of profits at the end of the year by decision of the meeting of the owners of the organization, the balance of retained profits is added to the retained profits of previous years. In case of a loss, the data on the indicated balance lines are given with a minus.

Pages: 1

	Elen
Added:	#2 Sat Feb 20, 2010 23:06:47
The headline of the message:
1. In the chart of accounts there are two profit (loss) accounts 5510 Retained earnings uncovered loss of the reporting year 5520 Retained earnings uncovered loss of previous years Profit for the reporting year is collected on account 5510 (it is also calculated in the income statement) 2. In January, the profit of the reporting year is transferred to the profits of previous years Dt 5510 Kt 5520 (If we are talking about profits, not losses) In this way, the profits of previous years are accumulated. 3. Profit accumulates if it is not distributed among the founders (shareholders). This distribution is dividends. This distribution reduces accumulated earnings.

Retained earnings in the balance sheet (nuances)

All movements with profit - the formation of distribution is reflected in the statement of changes in equity

the profit and loss report calculates the financial result of the reporting year

Yes, on an accrual basis, minus dividends paid.

Added after 1 minute 44 seconds:

So are you asking about the balance sheet, or about the profit and loss statement?

I agree, without an example the theory is not perceived.

For simplicity, an example where profits were not distributed

Today is December 31, 2009. The company has accumulated profit from previous years on account 5520 (i.e. without 2009 profit) 100,000 tenge (Credit balance, since profit)

On the income and expense accounts in the balance sheet (a very simplified version) we have:
1 Credit balance on account 6010 (Income from sales) 500,000 tenge
2 Debit balance on account 7010 (cost of goods sold) 300,000 tenge
3 Debit balance on account 7210 (Administrative expenses) 50,000 tenge

We prepare a profit and loss statement for 2009 (also a simplified version, without other income, expenses, income tax)

Gross income 200,000 tenge
Total income 150,000 tenge Remember this figure
In accounting, we close income and expense accounts
Dt 5610 Kt 7010 300 000
Dt 5610 Kt 7210 50 000

Account 5610 has a credit balance of 150,000 tenge. Making the wiring

Last years (Credit balance 5520) 100,000
Reporting year (credit balance 5510) 150,000
Total (total accumulated profit for previous years + profit for 2009) 250,000

You are right. Of course, you understand that income tax is calculated not from accounting profit, but from taxable profit (and they are extremely rarely equal). Therefore, we believe that the tax will be 30,000, and we did not calculate this tax in the financial statements 😀

Profit and loss report for 2009 already taking into account tax

Income from sales 500,000 tenge
Cost of products sold (300,000) tenge
Gross income 200,000 tenge
Administrative expenses (50,000) tenge
Profit before tax 150,000 tenge
CIT expenses (30,000)
Total income120,000

CIT expenses are reflected in accounting (again for simplicity)

Dt 7710 Kt 3110 30 000

Closing income and expenses:

Dt 6010 Kt 5610 (Total income) 500,000
Dt 5610 Kt 7010 300 000
Dt 5610 Kt 7210 50 000
Dt 5610 Kt 7710 30,000

Account 5610 balance 120,000

We make a transaction for this amount

Dt 5610 Kt 5510 120 000

In the balance sheet as of 01/01/2010 we see

Profit of previous years (Credit balance 5520) 100,000
Reporting year (credit balance 5510) 120,000
Total (total accumulated profit for previous years + profit for 2009) 220,000

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