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Deadwood Al
January 6, 2025
Question

Question on equity account(s)

  • January 6, 2025
  • 1 reply
  • 0 views

The existing GL has one Equity account ... I am used to having more than one, essentially one account for "Current Year Change in Equity" (the one to which the net income (excess) or loss (deficit) is closed into) and what appears as a separate line on the year end Operating Statement above the other Equity Account (the one that carries the Net Equity (for YTD before the current year change is JE'd into it) the YTD Net Equity.

 

Big Red recently told me that some of the account types are not changeable, so I'm wondering ... since this was set up long ago, am I able to add an account for Current Year Change in Equity and have the year-end net from operations close into that account, or am I left with the year-end close being one that I can't change? Is the lone equity account one of those I can't change in where the closing entries are made?

 

If the latter is true and I can't add a new closing Equity, then I'm thinking that I could rename / renumber the existing Equity account, then add a new Equity Account called Net Equity (or Equity Balance) and in January (after close of prior year) transfer the the  Current Year Change amount into the new account.  Any problem with that?

 

As always, thanks for the responses and guidance.

1 reply

I
Irene R
January 6, 2025

Managing equity accounts in QuickBooks Desktop (QBDT) is an important task, Deadwood. Let's dive into some helpful information about this topic.

 

Big Red is right about some account types that aren't changeable; however, you can set up multiple equity accounts. To do so, you can follow the steps below:

 

  1. Open your QBDT account.
  2. Go to the Lists menu, then choose Chart of Accounts.
  3. In the Account ▼dropdown, select New.
  4. Choose an account type, then click Continue.
  5. Complete the account details.
  6. Click Save & Close.

 

Refer to this article for more details on adding accounts in QBDT: Add, edit, or delete accounts in QuickBooks Desktop. Please note that the year-to-date income or net loss will still be posted to the default equity account created by QuickBooks.

 

Moreover, if you have multiple equity accounts, you'll need to create a Journal entry to transfer your net income and loss to the equity account you've created. Upon doing so, It's advisable to have a backup of your data and consult your accountant for guidance. If you need an accountant, visit Find a QuickBooks ProAdvisor for assistance.

 

Additionally, I'll provide this material that discusses creating journal entry reports in QBDT for an overview of your account transactions: Use the transaction journal report in QuickBooks Desktop.

 

Drop a comment below if you have any other questions about your equity account QBDT. I'll be sure to help you out. Keep safe!

D
Deadwood AlAuthor
January 6, 2025

Well, thank you for the response, but ... you didn't directly answer my question. It sounds like QuickBooks did establish the account used for closing entries and that I can't change that, true? So then my last paragraph would apply. I assume I can change the account name and then create a new Equity for Equity Balance to JE the Current Year Change total into the new account so that the Current Year Change account (the one QB has established as the closing account) can be zeroed out at the start of a new year.

 

Yes? No? Clear answers please.

L
LouiseG12
January 6, 2025

Yes, you're correct, Deadwood. There are accounts established by QuickBooks that cannot be changed. However, you can set up multiple equity accounts and create a journal entry after, like my colleague suggested. I'll provide some more information to help with this.

In QBDT, the default equity account, automatically created when you establish your company file, is used to close your accounting entries. Although this name cannot be modified, you can still manage your fiscal responsibilities efficiently by transferring your net income and losses through a journal entry to any additional equity accounts you’ve set up, as my colleague previously mentioned.

 

After making these transfers, consulting with your accountant can provide deeper insights and ensure everything aligns with best practices. If you're in need of a qualified professional, our QuickBooks ProAdvisor is at your service and just a click away.

 

Moreover, you can refer to the following article for comprehensive information on effectively closing your fiscal year in QuickBooks Desktop: Year-end guide for QuickBooks Desktop.

 

As you manage your equity accounts, remember that I'm here to provide support through the process. If you have any questions or need further assistance with your accounts, please revisit this thread. The Community and I are committed to offering prompt and thorough assistance in this forum. 

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