Retained Earnings is the amount of net income (or profit) reserved for reinvestment into the business. At the end of a financial year, the income and expense accounts are set to zero and their balances are transferred to the Retained Earnings account (a permanent equity account) on the Balance Sheet. This is done as part of the yearly closing of accounts. CORE supports the automatic closing of accounts at year-end and rolls up your net profit or loss into the default Retained Earnings account, reflecting that on the financial reports. You can also close your accounts manually. Check CORE Help Center for more details.
Run the Profit & Loss report
To see what makes up your Retained Earnings, you need to run the Profit & Loss report as of the last day of the fiscal year. To run the Profit & Loss report, follow these steps:
- Navigate to the Reports screen in CORE.
- Search for the report Profit and Loss Accrual Basis and run it.
- On the Customize Report dialog > Filters tab, select the filter Transaction Date - As Of - <End date of your fiscal year>. For example, if the fiscal year ends 12/31/2022, you need to run the report as of 12/31/2022.
- Click Continue to view the report.
If the amount on the Profit & Loss report differs from the Retained Earnings account on your balance sheet, it means transactions have been manually entered against the Retained Earnings account, for example, via general journal entries.
Review and compare the Retained Earnings account
You can run a quick report for the Retained Earnings account, which shows the year-on-year and total retained earnings. To do that, follow these steps:
- Go to Accounting > Chart of Accounts.
- Search for the account Retained Earnings - 3900.
- Click on the drop-down arrow to the right and select View Report.
The report displays all the transactions affecting the Retained Earnings - 3900 account: