Guide: How to view and What are Retained Earnings in QuickBooks?

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Your Retained Earnings account shows the total of your company’s income and expenses from all previous years. When a new financial year starts, QuickBooks Online automatically adds the net income from the previous financial year to your Balance Sheet as Retained Earnings. If you are operating a small or mid-sized business, it becomes imperative to have extra finance for investing or paying your liabilities. However, most of the QuickBooks users have just reached the surface of its true potential. Either they are not aware of its features and functionalities or just have confusion on how to use them. Today, we are here to discuss one of such topics that might create confusion among QuickBooks users. By knowing the exact balance of retained earnings, you can get help in making decisions related to finances.  To get a thorough explanation of what are retained earnings in QuickBooks, read this instructive article. 

What are Retained Earnings in QuickBooks?

QuickBooks retained earnings indicates the net profit/loss on income statement of the company that is due to be paid as dividends. In other words, retained earnings are the profits reserved by the company for distributing them as dividends to shareholders. 

You can pay dividends in the form of stock or cash and then subtract them from the total retained earnings of the company. Mainly, retained earnings are utilized for business reinvestment or hold up finances by saving cash.

You have to enter retained earnings in the following ways.  

  • In the balance sheet, retained earnings show under the owner’s equity section or shareholders’ equity. 
  • Showed as a standalone summary report (Statement of retained earnings as required). 

How to Calculate QuickBooks Retained Earnings?

After knowing ‘what is retained earnings in QuickBooks’, it’s time to get the formula to calculate RE. It will be easy to calculate the retained earnings balance at the end of an accounting period by applying the following formula. As we have mentioned above, retained earnings QuickBooks is the profit tax that remains after the dividends have been shared with the shareholders. 

Retained Earnings (RE) = Adding Retained earnings at the starting of the accounting period + Net Profit (or Net Loss) during an accounting period – Dividends Paid.

Example of calculating RE from the income statement and balance sheet of Company A

ParticularsAmount ($)
Retained Earnings (as on 31st December 2019)300,000
Net Profit (as on 31st December 2020)50,000
Dividends Paid (as on 31st December 2021)20,000

Then, Retained Earnings of Company A as on 31st December 2021 = Retained Earnings at the starting period + Net Profit –Dividends Paid 

= $300,000 + $50,000 – $20,000

= $330,000

When Retained Earnings put to use in QuickBooks?

You can use retained earnings in many various ways such as investing net profits to generate revenue, or utilize RE as Working Capital. Along with this, you will be able to buy new business assets such as property, equipment, vehicles, or machinery. Here are other examples in which you can use retained earnings.

  • Providing for Acquisition / Merger 
  • Funding expansion 
  • Paying off existing debts 
  • Distributing Dividends 
  • In case of unforeseen contingencies 
  • Funding share repurchase 
  • Funding new product launches

Also Read: QuickBooks Product Comparison – A Comprehensive Guide

How to Create a Retained Earnings Statement?

Follow these five steps to create a retained earnings statement. Or, you can hire an expert by contacting our team. We are here to assist you whether it’s regarding creating retained earnings statements or telling you about the features of QuickBooks. 

Step 1: Adding the heading 

First of all, you need to add a three-line heading at the top. This heading contains the name of your business/company. In the second line, you have to write down the document title like “Statement of Retained Earnings”. And, add the accounting period for the report in the final line such as “For the Year 2021”. 

Step 2: Recording the last year’s balance 

This one will be the first item that needs to be recorded and carry over the last period’s starting balance. If you are considering it as the first statement of retained earnings, then the starting balance will be zero. 

Let’s assume the retained earnings of last year us $20, 000.

Then, the first item that will be recorded is: 

Beginning Retained Earnings Balance: $20,000

Step 3: Record Net Income 

After adding last year’s balance, you need to find out the net income statement. If it’s a net profit, then add it to the beginning balance or vice versa. Below, we have explained it by giving an example. 

Beginning Retained Earnings Balance $30,000

Add: Net Income                                     $20,000

Step 4: Subtracting Dividends paid out to shareholders

If you have any dividend policy and you have paid them to the shareholders within the accounting period, subtract dividends from the net income.

Beginning Retained Earnings Balance $30,000

Add: Net Income                                      $20,000

Subtract: Dividends                                 $10,000

Step 5: Calculating the total QuickBooks retained earnings 

Now, the final step is to calculate the outcome (retained earnings) for the current accounting period.

Beginning Retained Earnings Balance  $30,000

Add: Net Income                                       $20,000

Subtract: Dividends                                  $10,000

Closing Retained Earning Balance         $40,000

Where to Find QuickBooks Retained Earnings Account?

Well, retained earnings account will be automatically generated. You may find issues in finding the account either you have deleted or disabled retained earnings account. If so, attempt the following steps to find the account.

  1. Firstly, choose view inactive accounts and click on the Lists menu.
  2. After that, click on Charts of Accounts and select Accounts.
  3. Now, click on the Show inactive accounts option and delete the X next to the retained earnings for reactivating the account. 

If the aforementioned steps did not work, you can create a new account by following the steps listed below.

  1. Choose the Reports menu and click on Company & Financial.
  2. After that, click on the Balance Sheet Standard report.
  3. Finally, the report displays QuickBooks to create a new retained earnings account if the previous one has been disabled or deleted. 

Final thoughts…!

Expectantly, you escalate reading the post and apprehend the concept behind “what are retained earnings in QuickBooks.” As you have read, retained earnings come under equity (liability) that may affect your company’s income and the previous year’s expenses. If you have still any queries regarding retained earnings, make a call at QASolved. We have experienced professionals who are available all round the clock just to assist you at any time.

An All-Inclusive Guide on Retained Earnings in QuickBooks

The retained earnings in QuickBooks shows the profit of a company reinvests. QuickBooks Online users move their money to retained earnings using a transfer known as an electronic swap. You can’t see this swap on any report unless there have been other entries made to the Retained Earnings account. To see what makes up your Retained Earnings, you need to run a Profit and Loss report. In this post, we will see how to view retained earnings account in QuickBooks and discuss some other important details related to it. 

How to View Retained Earnings Account Details in QuickBooks? 

QuickBooks retained earnings account displays the income and expenses of your company from all previous years. QBO automatically adds the total income from the previous financial year to your balance sheet as retained earnings in QuickBooks with the start of a new financial year. However, it is not possible to views retained earnings details from the balance sheet. The RE account is made of all previous financial years’ net profit (or loss). QBO automatically make the electronic swap to transfer funds from your net income of loss into the account that does not record any visible transactions for it. 

Therefore, you need to run your previous year’s Profit and Loss statement to see what your retained earnings in QuickBooks constitute. 

Run Your Profit and Loss Report 

To run your profit and loss report in the QuickBooks application, follow the below-given steps: 

  • First of all, go to the Reports
  • Now select the Profit and Loss report. 
  • After that, select All Dates from the Report period drop-down menu
  • Next, select the Run Report option. 
  • Proceeding further, select Net Income amount to open the Profit and Loss Detail report for All Dates. 

These steps will help you to run the Profit and Loss Detail report so that you can see all the transactions that QuickBooks Online transfers to the retained earnings in QuickBooks. 

View Year-Wise Profit and Loss Report

The below-given steps can help you in viewing the Profit and Loss report by year to track retained earnings with the utmost ease:

  • In the first place, go to Reports.
  • Next, you need to find and select the Profit and Loss report.
  • Now in the open Profit and Loss report, select Customise to proceed further.
  • In the Customise report panel, select the Rows/Columns item, and it will open the section. 
  • Proceeding further, select Years from the Columns drop-down list.
  • Select Run report to finish the procedure. 

You may now see the profit and loss amount transferred to the retained earnings in QB. If you find any discrepancies between the current Retained Earnings amount and the amount on the Profit and Loss report, you will need to view the account QuickBooks report. 

Review the Retained Earnings account Quick Report

To review the account’s Quick Report and determine the correct retains earnings in QuickBooks, follow the below-given steps: 

  • Move to Settings, and then select Chart of Accounts to proceed further.
  • Next, you need to find the Retained Earnings account.
  • Now from within the Action column drop-down menu, select Run Report.
  • After that, select All Dates from the Report period drop-down list.
  • Select Run report to check if any user-created transactions affecting the Retained Earnings account figure. 

Read More: QuickBooks Fatal Error Code: How To Resolve? 

Contact Experts for Further Assistance!

The steps discussed in this post can help you on how to view retained earnings in QB. If you need to talk to an expert on having technical unease, give us a call on our QuickBooks error helpline number . On connecting, you can get all your queries resolved related to the retained earnings in QuickBooks application. 

TRUE JOE WAYS: Retained Earnings Clearing Account

As we are rapidly approaching the end of 2014 there will of course be those new QuickBooks users who are confused by the fact that QuickBooks is a perpetual accounting system and does not really ‘close’ year end periods.  They will equally be confused by the fact that their balance sheet on 12/31/2014 at the last moment of the year, and on 1/1/2015 at the very first moment of the year are not the same due to how QuickBooks calculates and posts Retained Earnings.

While QuickBooks “Pro’s” understand this process, they are frequently surprised later in the year when changes appear in their Retained Earnings prior to establishment of a closing period and password (or even if someone has ‘snuck’ the password and made a change that impacts Retained Earnings.)  As such Joe Woodard published an article a few years back about the benefits of using a Retained Earnings Clearing Account, I have brushed off his article and with a few updates, here is another timeless “True Joe Ways” just in time for year’s end.  (Some things just never go ‘out of season’, and also warrant remembering when the time is right…)

How QuickBooks Calculates Retained Earnings

QuickBooks has an auto-close feature that recalculates retained earnings and net income depending on two sets of report criteria: 1) the date of the report you are reviewing and 2) the “cash” or “accrual” basis of the report. For example, a Balance Sheet dated 12/31/2014 will show a different amount for Retained Earnings and Net Income than a Balance Sheet dated 01/01/2015. When you advance the report forward into the next financial year, QuickBooks nets the amount of Net Income (or Loss) into the Retained Earnings balance – as shown below.Expand

Retained Earnings 1.jpg

This calculation method for recording closing entries is creative and flexible, because it allows for the cash/accrual conversion, and it allows users to process transactions during the current financial period without any restrictions. This “soft close” also allows accounting professionals (e.g. tax preparers) to easily enter tax adjustments for the previous year even if the current period is in March – or even later. However, there are two potential issues with the calculation method that QuickBooks uses: 1) it can be difficult to track changes to a previous fiscal year even if the Closing Date protects the previous fiscal year. For example, if you merge two accounts together, the Closing Date doesn’t track the activity and there is no “red flag” indicator that lets you know something has changed. 2) You cannot show a Balance Sheet as of 12/31 where Net Income and Retained Earnings are netted together (i.e. an after closing Balance Sheet or after closing Trial Balance).

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You can use the following trick to address each of these issues above:

Step 1. Change the name of the existing Retained Earnings account to “Retained Earnings Clearing.”

Step 2. Create a new Equity account called Retained Earnings.

Step 3. After you have finished making all edits to a fiscal year, enter a journal entry for the total amount of Net Income. Debit the Retained Earnings Clearing account and credit the Retained Earnings account.

Step 4. On the Balance Sheet as of 12/31, Net Income and Retained Earnings Clearing will cancel each other – positive and negative balances will be the same – and the Retained Earnings balance will show the correct amount.Expand

Retained Earnings 2.jpg

Step 5. If a user makes a change to a posting transaction dated in the “closed” year, QuickBooks will immediately show the change as a balance in the Retained Earnings clearing account – for the current period. This creates an instant “red flag” for changes made to closed periods.Expand

Retained Earnings 3.jpg

Learn How to Zero Out Retained Earnings in QuickBooks

In accountancy, the transfer of the balances a company accumulates in a fiscal year to an account is deemed highly significant. Not only this transaction helps out the company to get an understanding of their business’s profit or loss figures, but it also helps them to begin the coming fiscal year without any inconsistencies. Usually, it requires the help of an accounting professional to look over the whole process to avoid any mistakes. However, you can zero out retained earnings in QuickBooks without the help of one as it is done automatically by the software at the end date of the fiscal year set by the company. Read till the end to figure out the steps and prior warnings.

How to Delete Retained Earnings in QuickBooks?

The retained earnings of a company are referred to as the fiscal year’s ending balance, irrespective of the positive or negative connotations along with it. It shows the final amount after all the invoices are done and all the bills are paid. If the expenses and earnings of a company are $15000 and $17000 respectively, the final number will show a negative balance of $2000. However, if the earnings are more than the expenses, there will be a surplus that has to be transferred before the start of the next fiscal year. As we mentioned earlier, QuickBooks automatically transfers the retained earnings of the user to an account assigned by the business. Hence, there is no need to get rid of the retained earnings in QuickBooks as it is done by the software itself. However, it is important to choose a closing date for the financial year of your business so the software can close the retained earnings account in QuickBooks. Follow the given steps to be done with it right away.

  1. Open QuickBooks and go to the Edit menu.
  2. Select Preferences and then choose Accounting option.
  3. Click on the Company Preferences tab and click on the Set Date/Password button.
  4. In the coming window, select a Closing Date from the calendar.
  5. Enter the Closing Date password and then confirm it in the next box.
  6. Click on OK to close the window and then select Save & Close.

What to do if the QuickBooks Retained Earnings are Incorrect?

It is always good to correct the errors committed in your fiscal statements in the previous years. Since you can’t affect the corrections in those particular financial reports, as you have already sent them out. However, you can post the earlier period adjustments in the running period’s retained earnings account to correct the discrepancy. Let’s take an example that you unknowingly overstated your annual sales two years ago. So, in order to fix it, debit the overstated amount to the opening balance of the current period’s retained earnings account and credit it in the revenue account. This entry decreases revenue and retained earnings to reflect the correct financial position of the business.

How do I adjust retained earnings in QuickBooks?

If there are any irregularities between the retained earnings and current fiscal year’s statement of your business, you can clear them out by checking through the transactions in the journal reports or the general ledger. We might like to add that it is better to have your accountant to assist you with it and correct any mistake with a transaction that is causing the errors.

Here, we would like to end our blog on the queries related to how to zero out retained earnings in QuickBooks. We hope that the information jotted here from the trusted and expert sources will help you to solve all the problems you are facing while completing the deed. However, if you require any additional support whatsoever, dial and get on the line assistance anytime.

Retained earnings in QuickBooks

Retained earnings in QuickBooks

Firstly we need to know what is retained earnings.

Retained earnings is the amount of profit which we get in whole year by paying all the dividends and giving shares to all the shareholders.

In other words, the amount comes less all the expenses is the retained earnings.

Any company whether it will be big or small in size will be able to analyze their profit and losses at the end of financial year. Owner makes the income statement and profit and loss account to record the accounts and it will be helpful to prepare the balance sheet at the end of the year. Then the business takes out the amount of reatained earning and put it on the equity shareholder’s side in the balance sheet.

Retained earnings plays big role in every business.

How retained earnings work?

If we create a retained earnings account with the help of any software like QuickBooks. QuickBooks is the amazing accounting software that allows all of us to create reatained earnings account without any major mistakes. It helps in creation of accurate accounts and also to describe our business position.

If you are a user of QuickBooks then you don’t need to create reatained earning account because QuickBooks automatically create your account.

Find retained earning account in QuickBooks

Retained earnings always helps to shows the income and expenses of the company for the total year and to get the net income transfer it in the balance sheet.

You can follow these below steps if can’t find out your retained earning account in QuickBooks.

  • Go to the reports
  • Open your balance sheet
  • Go to reatained earning items to know your company’s net income

If you are interested to create your company in QuickBooks. QuickBook automatically creates your reatained earning account and also helpful to automatically transfers all the profits of your reatained earnings account to make new account at the end of financial year.

After going to retained earning account, you need to distribute all of the previous years income in retained earnings account and also make sure that the debit side will be equal to the credit side.

How to find details in QuickBooks

If you want to see your details of retained earnings from balance sheet or if you can’t find out the details of your retained earnings account then QuickBook is very helpful.

If you want to know all the details then you need to run your all previous years P&L account.

  • Locate the reports
  • Choose the P&L report
  • Select all dates in report
  • Choose run report
  • To view all the details of P&L report choose net income.

By following these steps you can view the details of P&L report that QuickBooks transfer to retained earnings.

There are some steps which will help you to view all the details year by year.

  • Loacate your report
  • Go to the P&L report
  • Choose “customize” in P&L report
  • Choose row and column under the customize
  • Choose all years under the column.

Quick report in retained earnings

If in any case you find that your P&L report doesn’t match with the retained earnings, only the transactions may affect the balance sheet.

With the help of these steps you can find out the quick report.

  • Choose “chart of accounts” in setting
  • Go to retained earning account
  • Select “run report” from action column
  • Choose the dates under the report period
  • Now you need Choose “run report” to see all transactions.

I hope you will now understand about the QuickBooks retained earnings. If you want to know more about QuickBooks retained earnings or need any type of related help and advice you can contact QuickBooks proadvisor 

Benefits of hiring QuickBooks proadvisor 

There are various points and benefits that you must know before hiring any QuickBook Proadvisor

  • By hiring a certified QuickBook Proadvisor of currace it will be helpful for you to manage your workflow and to run your business without any issue.
  • By hiring QuickBook Proadvisor you can get the good guidance for accounts and user management.
  • With the help of QuickBooks proadvisor you can easily achieve your financial goals and vision.
  • Proadvisor always helps you to know about the accounting rules and upcoming features and also helps you to stay updated about account.
  • QuickBooks proadvisor always helps you to handle your any type of accounting activities.
  • If you are a new user and need to try QuickBooks then you can take suggestions from the expert they will help you to know which version is best for you.
  • By taking suggestions from proadvisor you will get a maximum discount. If you are a student and interested to know more about QuickBooks student discount then you can contact a good proadvisor.
  • By hiring a QuickBook Proadvisor or with the help of them without any problem you can enter the transactions.
  • Proadvisor always helps you to manage your payment deductions, and other transactions.

Understanding QuickBooks Retained Earnings

If you are using QuickBooks Desktop to manage your business, you must have heard about the retained earnings in QuickBooks. If you don’t have a clear idea about QuickBooks Retained Earnings, this article can be helpful for you as in this article, we are going to have an in-depth analysis of QuickBooks Retained Earnings.

Sometimes, your QuickBooks retained earning may be lost or you can face several errors or issues regarding your retained earnings. If you find yourself in such situations, there no need to worry about. You just need to follow the steps we have mentioned in this blog or you can dial our toll-free QuickBooks Customer Service Phone Number for assistance.

QuickBooks Online is designed in such a way that is transfers or move your money retained earnings automatically when the year ends. QuickBooks also creates a report when you create entries in QuickBooks Retained Earnings account.

However, if you want to check why retained earning your company or business, run a profit and loss report that will help you in checking information to check your Net Income amount.

QuickBooks Retained Earnings also helps you in verifying your company’s net income and expenses for a year. QuickBooks Online includes the net income from previous financial year in the balance sheet at the starting of new financial year.

Hopefully, you have a clear idea about the QuickBooks retained earnings. However, if you are still in doubt, just connect with a QuickBooks Expert. You can connect with us through our QuickBooks Live Chat Support program as well.

How To Find Retained Earnings In QuickBooks?

As you know that the retained earnings account stores information regarding your company’s income and expenses. However, you can’t only rely on Retained earnings in your Balance sheet to check your information.

Retained Earnings account basically is a pack of information that covers all the previous year’s net profit and loss.

Steps To Find Retained Earnings In QuickBooks

Step 1: View the Profit and Loss Detail report

  • From the Reports menu, open the Profit and Loss report. If you can’t locate this report, press CTRL + F keys and type Profit and Loss.
  • Under the Report period drop-down, select All Dates.
  • Select Run.
  • Select your Net Income Amount to check your Profit and Loss stats for All Dates.

You can now view all the transactions liable for the net profit or loss. QuickBooks Online transfers the amount to your Retained Earning account by itself and you don’t have to do that manually.

Step 2: View the Profit and Loss report by year

You need to run Profit and Loss report to track and manage Retained Earnings accurately.

  • From the Reports menu, open the Profit and Loss report. If you can’t locate this report, press CTRL + F keys and type Profit and Loss.
  • Select Customize option and then from the customize report section, click on Rows/Columns.
  • From the Columns drop-down, click on Year and then select Run

Now, you will be shown the Profit and Loss amount transferred to the Retained Earnings as per year-by-year basis. In case if the amount mismatch between retained earning account and profit loss report, you need to check your QuickBooks Report.

Step 3: Review the Retained Earnings account Quick Report

Following these steps will help you in reviewing the retained earning account report:

  • Go to Settings and then select Chart of Accounts.
  • Locate your Retained Earning account.
  • Now, from the Action drop-down options, click on Run Report.
  • From the Report Period drop-down, select Dates and then Run Report.

Now, you will get a report containing information regarding your user-created transactions that are affecting Retained Earning account figure.

How Does QuickBooks Calculate Retained Earnings?

To make it simple, retained earning are the sum of your company’s profit that are undistributed.

QuickBooks Online moves or transfers your annual profit to the retained earning account automatically when the year ends. The company has to pay the amount to shareholders, and it will be subtracted from profits.

What Type Of Account Is Retained Earnings In QuickBooks?

QuickBooks not only transfers the profit amount to your retained earnings account, but it also creates an equity account for your company. QuickBooks also allows you to decide or set the closing date for your company.

Hopefully, you find this article helpful and you have a clear idea about retained earnings in QuickBooks. However, if you are still in doubt, you can get connected with our technical support staff by dialing our toll-free QuickBooks Support Phone Number  and get your doubts cleared.

Also Read :: QuickBooks Error Support Instant Helpline Number

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