Topic: Retained Earnings - Liability or Equity?
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.