Profit for All Prior Years

BC1BC1 Member Posts: 5

Hi, I would like to be able to adjust "Profit for all prior years" account. I can't find this when doing a Journal transaction. Please advise. Ex this is a removal of partnership profits transaction.

Comments

  • AlexLAlexL Administrator Posts: 2,637 admin

    Hi @BC1 , can you give me some more information around where this account is located in your Chart of Accounts? This isn't an account which is automatically created by Wave so this would have been created on your end.

    Let me know where it's located and I should be able to advise as to why it's not showing up.

    edited February 5, 2021
  • BC1BC1 Member Posts: 5

    Well, we didn't add either so bit of a mystery then. This shows on trial balance above "total equity" and below "owner's equity". When i click on account name, it displays a net profit description i.e.
    "Income - Cost of Goods Sold - Operating Expenses = Net Profit" and the total Net Profit matches the amount listed under this trial balance "profit for all prior years". Frankly this should be under retained earnings but for the life of me i don't know what / why this is happening.

  • BillyZBBillyZB Member Posts: 2

    Hi, to piggy back off this, I experienced the same thing last year where a Profit for all prior years shows up in my Trial Balance report and it really confused my accountant.

    I also would like to know how I can make adjustments to this account because my accountant sent me adjustments this year to combine this account with retained earnings. Alternatively, is it possible to hide this "Profit for all prior years" account from the reports? Not sure of the implications of that though.

    I recall in 2019 when I was generating reports for my 2018 year end, this "Profit for all prior years" account did not exist.

    Thanks.

  • BillyZBBillyZB Member Posts: 2

    Hi @AlexL, any update on this? Thanks.

  • AlexLAlexL Administrator Posts: 2,637 admin

    Hey @BC1 & @BillyZB , thanks for your patience while I got back to you. I followed up with a colleague to get a good idea of what exactly this account is and it turns out it is indeed an account created by Wave (my apologies on the mistake) which is basically an equivalent to a retained earnings account. Making adjustments to previous years in your accounting/Transactions page in general will have an effect on the "Profit for all prior years" account. Although there isn't a specific way to edit just that balance, making changes to past transactions will affect it.

  • BC1BC1 Member Posts: 5

    So it is a duplicate of Retained Earnings account or a replacement? "Equivalent" seems very "unaccounting" terminology. Historically, every accounting system i've used has a Retained Earnings account and this is the way it is taught in school. I'm just trying to figure out what i should do. Can i rename it Retained Earnings? And back to my original question, if I want to adjust Retained Earnings / Profit from all prior years - how to do so? I.e. issue a dividend. Normally i'd debit Retained Earnings and credit a Dividend Payable/Cash account. How do I do this under the Profit for all prior years scenario if I am unable to directly DR/CR that account?

  • AlexLAlexL Administrator Posts: 2,637 admin

    Hi @BC1 , it's not an actual account in Wave but more of a categorization which appears in your reporting to represent just that, the profit for all prior years. If you click into it, you'll notice it takes you to the Profit & Loss Report with your filter adjusted to represent previous financial years. This means that it's not an actual account that you can actively debit or credit.

    I'm afraid we as support agents can't comment on accounting as complex as dividends or how to create retained earnings in the software so I would recommend reaching out to an accountant or CPA who can advise you on the best way to do so. We do have a blog article on how you can calculate your retained earnings which may help you out with this, and you can check it out through this link.

    edited February 23, 2021
  • BC1BC1 Member Posts: 5

    Hi AlexL, I would prefer that this non-account NOT show up on my real balance sheet. Does it make any sense to include an account, which by your admission is not really an account, but have it show up on a balance sheet report? It should only be retained earnings on the balance sheet.

  • Amy_AAmy_A Member Posts: 1

    @BC1 said:
    So it is a duplicate of Retained Earnings account or a replacement? "Equivalent" seems very "unaccounting" terminology. Historically, every accounting system i've used has a Retained Earnings account and this is the way it is taught in school. I'm just trying to figure out what i should do. Can i rename it Retained Earnings? And back to my original question, if I want to adjust Retained Earnings / Profit from all prior years - how to do so? I.e. issue a dividend. Normally i'd debit Retained Earnings and credit a Dividend Payable/Cash account. How do I do this under the Profit for all prior years scenario if I am unable to directly DR/CR that account?

    @BC1 Did you happen to figure this out? Thanks

    edited February 23, 2021
  • BC1BC1 Member Posts: 5

    The only thing i can think to do at this point is try and do a retained earnings adjustment and see what happens, the whole scenario seems strange but such is life. So, in short, no i haven't figured out but will post an update once i get around to trying.

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