Retained Earnings and Profit/Loss Year issue

Hi, x_roast

Retained earnings is under Balance sheet Liabilities & equity section.
Goto Banking and General Ledger>GL Account Groups, add Retained Earnings account and select Liabilities on Class.
Goto Setup>System and General GL Setup, select your Retained Earnings account you just created.

Year Profit/Loss is under Income Statement/Profit and Loss Statement.
Goto Banking and General Ledger>GL Account, create Year Profit/Loss account and select Expenses on Account Group.
Goto Setup>System and General GL Setup, select your Profit/Loss Year account you just created.

Regards.

@x-roast: Kindly share your workaround for peer review to ensure that you are on the right track.

the code is correct.
if (!is_account_balancesheet(get_post('retained_earnings_act')) || is_account_balancesheet(get_post('profit_loss_year_act')))
Display error if retained earning not a Balance sheet a/c OR profit & loss is a Balance sheet a/c

Profit & Loss is a company earned over a period of time (fiscal years),
Retained Earnings is the accumulated profits of the company since business started, minus any dividends distributed.
Profit & Loss is a temporary account like all revenue, expenses account, when you closing account, temporary account balance will transfer to permanent entries on balance sheet like retained Earnings, temporary account will set to zero in preparation for the new accounting period.

Hi, I just checked the display_error message, and I think I get what you meant.   
    if (!is_account_balancesheet(get_post('retained_earnings_act')) || is_account_balancesheet(get_post('profit_loss_year_act')))
    {
        display_error(_("The Retained Earnings Account should be a Balance Account or the Profit and Loss Year Account should be an Expense Account (preferred the last one in the Expense Class)"));
        return false;
    }
This is something like, enter user id and password, if either 1 is wrong then should display error message "invalid user id or password" or "invalid user id and password"?
of course, is better to split the code to check each error.
if (!is_account_balancesheet(get_post('retained_earnings_act'))
        display_error(_("The Retained Earnings Account should be a Balance Account ))
if (is_account_balancesheet(get_post('profit_loss_year_act'))
               display_error(_("The Retained Earnings Account should be a Balance Account ))

Yes, is Credit income, and debit expenses.

Sorry should be:
if (!is_account_balancesheet(get_post('retained_earnings_act'))
        display_error(_("The Retained Earnings Account should be a Balance Account ))
if (is_account_balancesheet(get_post('profit_loss_year_act'))
               display_error(_("The profit and loss should not be a Balance Account ))

Hi, I am only a FA user, those experts in accounting and FA please correct me if I am wrong.

In computerized accounting system, the Profit & Loss year a/c is mainly for keeping the profit or loss in the fiscal year.
I think what you mentioned P&L account is credit income debit expenses is for manual accounting system.
The COA in FA are template, you have to setup COA according to your country standard and company need.
The Romania COA should be wrong, just follow the FA standard, set Profit and Loss Year Account to Expenses class.

I think you are referring to Profit & Loss statement.
in manual accounting, you have to enter all debit and credit entries for trial balance, P&L and Balance sheet.
in computerize accounting system, all GL entries are posted from Sales,purchases, Journal entries etc modules,and trial balance, P&L, Balance sheet reports are generated from GL.
Profit and Loss, Balance Sheet report requirement differ from all countries, companies and type of business, so either we output FA report to excel format and modifying from it, or customize the 2 reports.

There are several ways of doing the Year end Closure. This is the way we are doing it.

At the year end, after closure all balance accounts should be in balance (assets - liabilities should be 0).

An example just before closure (a very simple illustration):

Balance accounts 
Assets           Liabilities 
  1000                   500 
                           X
----------------------------
 
P/L accounts 
Cost                  Income 
 800                    1300
   X
----------------------------

The annual year result (x) is debited the P/L accounts and credited the  Balance accounts (Retained Earnings).

Now all accounts are in balance.

And doing it this way we can use the P/L transactions for accumulated project P/L statements.

Joe

There is an  error in your explanation.

Where did the 20k in 3400 come from? We haven't done the closure yet.
This account should first be filled by the closure routine.
Well it is ok to make the closure manually by balancing the accounts before the closure routine.
If the balance accounts are already balanced, then FA is not doing any bookings.

Joe

Hi, You might try to do a search in the forum to see some more explanations. Otherwise I will try to make a more detailed  instruction about how the fiscal year closing is functioning in FA. Thanks for the discussion.

Joe

OK, I played around with the entire closing_gl module and I could not get it to work.   I reviewed the code, and frankly I'm not seeing HOW this could possibly close out the accounts.  Maybe I'm missing something. But we are talking about a traditional accounting closing exercise here right?  This essentially empties out the Revenue and Expense accounts and dumps the difference in a RE or SE account.  I do not see this calculation occuring anywhere in this code.  Again, maybe I'm missing something -> maybe it's calling it up somewhere else and I just missed it, but I am not now seeing how this code could possibly close out the books for a period (e.g., year).  Luckly it is an easy thing to do manually with a JE, and luckily one only has to do it once a year (in theory) per company.  Thanks