FrontAccounting forum — Retained Earnings - Liability or Equity?

Re: Retained Earnings - Liability or Equity?

null@example.com (paul) — Mon, 09 Sep 2019 00:39:49 +0000

I didn't catch the negative amount. Sorry.

Re: Retained Earnings - Liability or Equity?

null@example.com (oakstreet1) — Sat, 07 Sep 2019 02:33:30 +0000

Also, I am noticing a customer prepayment is simply going to the Accounts Receivable/Asset account. I don't find a Customer Deposit/Liability account. Is this by design? It would seem that a customer pre-payment should be recorded to a liability account since it isn't yet an asset.

The entries are recorded as negative amounts so they reduce your AR asset account. I guess a negative AR is a positive liability, but it works out the same.
Balances on customer accounts are determined independent of the GL and all customer charges and credits are rolled into AR in the general ledger.
I'm not saying it's the best or most correct way of doing it, but a negative asset has the same net result as a liability, so the balance sheet is correct.

Re: Retained Earnings - Liability or Equity?

null@example.com (paul) — Fri, 06 Sep 2019 16:20:32 +0000

Thanks Notrinos. I tried other US COA, but none seem any closer to what I am currently using.

Re: Retained Earnings - Liability or Equity?

null@example.com (notrinos) — Fri, 06 Sep 2019 15:18:49 +0000

Try install some other charts of accounts to see if one of them match with your system ?

Retained Earnings - Liability or Equity?

null@example.com (paul) — Fri, 06 Sep 2019 00:58:34 +0000

In my test setup, I am at the point of matching my current GL accounts to FA's accounts. First, I am looking for an account class of Equity for owner draws (sole proprietor). In the current system, my Owner Draw account is with Retained Earnings as a negative, but they are both in an Owners Equity group.

I find Retained Earnings in FrontAccounting, but it is in a Liability group. Since I am not an accountant, am I just splitting hairs here and the end result is the same - meaning, should I just place my Owner Draw account along with FA's Retained earnings under the liability group? Or should I create an Equity group and move the Ratained Earnings to the Equity Group.

Also, I am noticing a customer prepayment is simply going to the Accounts Receivable/Asset account. I don't find a Customer Deposit/Liability account. Is this by design? It would seem that a customer pre-payment should be recorded to a liability account since it isn't yet an asset.

Thank you,