Our Accountant has come back and said there is an amount that has been entered into the Retained Earnings Account. I've had a look at it and it is a system generated entry - closing entry. Is there a way I can find out what this entry is made up of
You are correct - by and large, Retained Earnings is system generated.
By definition it is the accumulated profits from previous financial years. Normally the only transactions posted directly to this account relate to payment of dividends (Cr Bank, Dr Retained Earnings), assuming that dividends haven't previously been reported on the P&L statement.
It is probably worthwhile running a transaction report on the retained earnings account just to double check that no other transactions have been posted directly into it.
I must admit to being a bit surprised that an accountant has what are "retained earnings"?
no he hasn't asked what retained earnings are.
He has noticed a difference in the account from June 20, an amount has appeared in the account but I can't work out what it is.
The other closing entry transactions are the profit for the year.
Is it the treatment of the 2019-20 profit?
By way of an example
at 30 June 2020, RAH might show
assuming no other transactions on 1 July 2020 RAH would then show
If this is not the solution, then definitely run the transaction report
yes most of it is the profit, but there is an entry in the retained earnings account that shows as a closing entry, but I cannot go into it to see where it has come from
Not sure what would give rise to this. Only suggestion I have if you can't drill down is to reproduce the report for the previous financial year and see if anything shows up there. Good luck
If you make further entries dated within the FY, the program will auto-enter additional Closing Entries accordingly in order to balance it (as it posts the net profit which obviously then changes) ☺️
Shaz Hughes Dip(Fin) ACQ NSW, MICB
0422 886 003