This is the account that tracks the increase in your business’s equity during the current fiscal year. The amount assigned to this account is determined by subtracting the balances of all cost of sales and expense accounts from the balance of all income accounts.
Current earnings = income less cost of sales
less expenses. This account is referred to as your
Current Year Earnings account.
This is the account that tracks the increase in your business’s equity for all fiscal periods, but not including the current fiscal year. When a new fiscal year is started, the current earnings account’s balance is added to the balance of this account. This account is referred to as your
Retained Earnings account.
If, for example, the opening balance of all your asset accounts is $100,000, and the total balance of all your liability and equity accounts is only $95,000, the remaining $5,000 will be assigned to this account. To ensure your business records are accurate, this account’s balance should be zero.
This account is referred to as your Historical Balancing account. This account captures any out-of-balance amounts inherited from your previous accounting system.
Whenenter a transaction in the Receive Money, Receive Payments or Sales window, you can indicate that you want the amount to be grouped with your undeposited funds. If you do this, those funds will appear in this account until you deposit them in a bank account using the Prepare Bank Deposit window.
For example, if you sell goods to a Japanese firm and you conducted the transaction in Japanese yen, any changes to the value of the yen will affect the overall profitability of the transaction. If the yen gains value against your local currency, this is a currency gain. If the yen loses value against your local currency, this is a currency loss. The linked account for currency gain/loss keeps track of these amounts.
