Why do we need retained earnings account in income statement?

[Former Member]

hi,

as far as i am concerned we need a retained earnings account only in a balance sheet statement. however i dont understand why do we need a retained earnings account in the income statement. can someone explain?

[Former Member · Accepted solution]

HI,

RETAINED EARNINGS ACCOUNTS WHICH CARRIES ACCUMULATED PROFIT/LOSS OF THE COMPANY. UNTILL AND UNLESS U CREATED ONE RETAINED EARNINGS ACCOUNT YOU ARE NOT ABLE TO CREATE G/L ACCOUNTS.

ASSIGN POINTS IF IT USEFULL ONLY.

REGARDS,

SANKAR

[Former Member]

Hi,

Retained earnings account defined in income statement carries the Profit/loss to Balance sheet. It also contains the Profits made in previous years.

The Retained earnings a/c we create in OB53 works as a link to carry the profit made to Balance sheet.

Regards,

Gangadhar

[Former Member]

Hi,

The current year profit/loss should also be transferred to Balance sheet at the end of the year. To capture your profit/Loss we need a Retained earnings account(T.code OB53).

Your Balance Sheet Retained earnings account would have balance of profit/loss till the closure of last year.

Regards,

Murali

[Former Member]

Hi

The account nothing but contains the accumulated profits which are divisible to the shareholders carry forward from the P&L account.

we define Retained earnings a/c in OB53.

Most companies use one retained earnings account. For this reason, X can be used as the key.

In the chart of accounts you enter X in the P+L statement account type field, and for account determination you enter the retained earnings account under the key X

assign points if useful