Last Updated on June 1, 2020 by Editor Team
Quickbooks retained earning shows your business profit and loss of the previous year. And when the new financial year starts then Quickbooks online automatically add the previous year’s net income into your current year balance sheet as retained earnings. And if in the current year your total assets and total liability are equal in the balance sheet. Then your retained earning will be zero for the current year. So you have seen how to zero out retained earnings in Quickbooks. So let’s see it deeply
How do I adjust retained earnings in QuickBooks?
Retained earning tell your past income of the business. When you close your accounting year in books. Then you have some profit balance retained. And this retained earning is directly transfer to next year’s balance sheet as retained earnings account. And this will be updated automatically when a new closing date occurs. But you can also change the closing date by these simple instructions.
- Open your Quickbooks and click on the Edit menu from the menu bar
- Now you need to select preferences and then select Accounting option
- Select date/ password from the company preferences
- After that specify the closing date and password, and then confirm it in the next box.
How To Zero Out Retained Earning in Quickbooks?
There is no legal way to zero out retained earning in Quickbooks. But if you have done any mistake in entering an amount in the income statement. Then you can have zero out retained earnings in Quickbooks. You can correct it by examining the financial report of your firm. You should also check your journal report and general ledger. And check your revenues and expense amount by following the below steps…
How To Do Closing Revenue And Expenses
If you see your retained earning is zero then definitely you have done any mistake in the recording income statement. Check your expense account by following the below steps.
- Open Quickbooks and go to the Chart of Accounts
- Now find Income Summary, if this option is not available then add Expense Account
- Similarly, you need to add the owner’s equity account as Retained Earning account
- Then you need to go profit & loss account report or Income statement
- Now you have to filter your P&L account as fiscal period
- Now you have to make a note for all revenue and expense account
- Then you have to go to the New Journal Entry Window to create new journal entries. Mention the date for the last day of the closing date.
- Now go to the P&L account and select all revenues and all the debit amounts.
- When getting the last line of the entry, then you have to select an income summary account, that you have created and credit the total of all the revenue accounts.
- Now simply you have to click on Save and then Close.
Note: Remember that your calculation and all the numbers are entered correctly. Because of this, all calculations will correct, then this journal entry helps you to resolve easily your Query “How To Zero Out Retained Earnings In QuickBooks”.
How To Close Opening Balance Equity Account
- Open Quickbooks app and go to P&L report or Income statement
- Then filter the income statement report to the fiscal period closing out
- Now you need to keep a note of your opening balance
- Then again go to the New Journal entry window, So that you can create new journal entry with the last day of the date of the closing period
- Now select the opening balance equity account from the Income statement report and make it debit amount.
- Now from the last line of the entry, you need to select the Income Summary account and make credit to all the opening balance equity account.
- After that, you have to click Save and then click on Close
Note: make sure all the calculations are accurate so that you can never face any problem during making zero out all the opening balance or equity account.
How To Manage Closing Income Summary
- First, you need to create a new journal entry that has a date just before the last closing period.
- Now you need to debit or credit the Net Income amount inside the income summary account. If you have revenue more than expenses then debit it or if you have lest than profit from expenses then credit it.
- Now select the retained earning account and do debit and credit similar to Income summary report.
- Then you have to click on Save and close.
So we have provided all the necessary steps to check zero out retained earning in Quickbooks. So follow the above steps carefully. And please read NOTE paragraph so that you will not face any kind of Quickbooks error while checking zero out retained earnings. So we hope you can now resolve your how to zero out retained earnings in Quickbooks. For more information you can contact Quickbooks ProAdvisor.