Comments on: Retained Earnings http://business-accounting-guides.com Small Business Accounting Thu, 19 Jan 2012 13:44:17 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Kenneth Meunier http://business-accounting-guides.com/retained-earnings/comment-page-1/#comment-1075 Kenneth Meunier Tue, 27 Sep 2011 03:01:47 +0000 http://business-accounting-guides.com/?page_id=222#comment-1075 Hi John - Sales have been increasing equity and assets (e.g. cash or A/R) all along. Similarly, expenses have been decreasing equity and increasing liabilities or decreasing assets, so the accounting equation remains in balance. When you close the books, equity increased to balance the accounting equation. This issue is also discussed on this page :http://business-accounting-guides.com/balance-sheet-template/ Kenneth Hi John -
Sales have been increasing equity and assets (e.g. cash or A/R) all along. Similarly, expenses have been decreasing equity and increasing liabilities or decreasing assets, so the accounting equation remains in balance. When you close the books, equity increased to balance the accounting equation.
This issue is also discussed on this page :http://business-accounting-guides.com/balance-sheet-template/

Kenneth

]]> By: John http://business-accounting-guides.com/retained-earnings/comment-page-1/#comment-1073 John Tue, 27 Sep 2011 01:08:00 +0000 http://business-accounting-guides.com/?page_id=222#comment-1073 Let's say assets are $100, liabilities are $70 and owner's equity is $30. How do we move $10 out of net income into retained earnings without throwing the balance sheet out of balance? Debit Income Summary $10 Credit Retained Earnings $10 $100 = $70 + $30 + $10 $100 = $70 + $40 It seems that the accounts will be out of balance since the entry above had no effect on asset or liability accounts. What am I missing? Thanks! Let’s say assets are $100, liabilities are $70 and owner’s equity is $30.

How do we move $10 out of net income into retained earnings without throwing the balance sheet out of balance?

Debit Income Summary $10
Credit Retained Earnings $10

$100 = $70 + $30
+ $10
$100 = $70 + $40

It seems that the accounts will be out of balance since the entry above had no effect on asset or liability accounts.

What am I missing? Thanks!

]]> By: Faiz http://business-accounting-guides.com/retained-earnings/comment-page-1/#comment-121 Faiz Thu, 09 Sep 2010 11:02:54 +0000 http://business-accounting-guides.com/?page_id=222#comment-121 How can I increase Directors loan (Shareholders libility) by reducing Retained Earning. Because the directors lend some money to pay off other liability. How can I increase Directors loan (Shareholders libility) by reducing Retained Earning. Because the directors lend some money to pay off other liability.

]]> By: Kenneth http://business-accounting-guides.com/retained-earnings/comment-page-1/#comment-38 Kenneth Tue, 01 Jun 2010 17:51:58 +0000 http://business-accounting-guides.com/?page_id=222#comment-38 You are very welcome. That's a great reason for doing this. Good luck on your test! You are very welcome. That’s a great reason for doing this. Good luck on your test!

]]> By: Matt http://business-accounting-guides.com/retained-earnings/comment-page-1/#comment-37 Matt Sun, 30 May 2010 07:19:52 +0000 http://business-accounting-guides.com/?page_id=222#comment-37 This explained the stock dividends so well, much clearer and more concise than what's in the CFA text (doing level 2 right now, test in a week). Very well written, thank you for posting this This explained the stock dividends so well, much clearer and more concise than what’s in the CFA text (doing level 2 right now, test in a week). Very well written, thank you for posting this

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