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w00t
January 6, 2025
Question

Year end entries for retained earnings

  • January 6, 2025
  • 1 reply
  • 0 views

Hey there,

 

I have been trying to learn how to handle end-of-year closing. For context, my QB account settings have the following settings:

 

  • first month of year: Jan
  • first month of income tax year: Same as fiscal year
  • Accounting method: cash
  • Close the books: 12/31/2024

 

I also fully reconciled my accounts through Dec 31, 2024. According to this page, QB will automatically add adjusting entries for Retained Earnings at the beginning of the new fiscal year. When I look at the balance sheet reports, my Dec 31, 2024, report has the same number for net income that my Jan 1, 2025 report has for retained earnings. However, I see no adjusting entries for retained earnings anywhere. I looked in the quick report for retained earnings account as per the procedure in the previously linked page. I don't see anything on that report.

 

Where do these supposed automatic entries get entered? Where should I see them?

 

1 reply

H
Heide DC
January 7, 2025

Thank you for providing the detailed information regarding your year-end entries, w00t. Let's generate a specific report in QuickBooks Online (QBO) to view the entries involved.

 

At the beginning of a new fiscal year, QuickBooks Online automatically transfers the net income from the previous year into your balance sheet as Retained Earnings. This account accumulates the net profits (or losses) from all prior fiscal years. QuickBooks Online seamlessly and electronically transfers funds from your net income or loss to this account without recording any visible transactions. Please note that its details will not appear on the Balance Sheet report. Rather, you will need to refer to the Profit and Loss statement from last year to see what makes up your Retained Earnings.

 

Because of this, to see what makes up your Retained Earnings, you have to run your previous year's Profit and Loss statement.

 

To view the Profit and Loss Transaction Report:

 

  1. Go to Reports.
  2. Locate and select the Profit and Loss report.
  3. From the Report period dropdown list, select All Dates.
  4. Select  Run report.
  5. Click the Net Income amount to open the Transaction Report for All Dates.

 

 

The Profit and Loss Transaction Report shows all the transactions that make up the net profit or loss that QuickBooks Online automatically switched to your Retained Earnings account.

 

You can view the Profit and Loss report by year to track Retained Earnings over time more easily:

 

  1. Go to Reports.
  2. Locate and select the Profit and Loss report.
  3. In the open Profit and Loss report, select Customize.
  4. In the Customize report panel, select the Rows/Columns item to open the section.
  5. From the Time Periods dropdown, select the checkbox on the periods you want to compare.
  6. Select  Run report.

 

The report displays year-by-year amounts so you can see the amount from the Profit and Loss transferred into the Retained Earnings account as it occurred.

 

If the amount on the Profit and Loss report is different from the amount currently displayed for the Retained Earnings account, kindly refer to this article: View Retained Earnings account details in QuickBooks Online.

 

To help you close your previous fiscal year and prepare for the new one, you can follow the steps for year-end. Afterward, memorize them to save their customized settings.

 

Also, you can explore the benefits of QuickBooks Live Bookkeeping to enhance your accounting processes. This service ensures accurate financial records and offers expert support tailored to your needs. By leveraging these resources, you can significantly reduce the time spent on bookkeeping tasks, freeing you up to concentrate on expanding your business and pursuing new growth opportunities.

 

If you have any more questions or need further assistance regarding year-end, please feel free to ask us at any time. We're here to help you make the most informed financial decisions for your business.

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