I noticed I have a balance being carried forward from the Prior Fiscal Year in my Retained Earnings account. This is making the figures on my Balance Sheet not match the YTD Net Profit/Loss on my Income statement. How do I correct this?
The most common reason for this to occur is that the Retained Earnings account was not closed out at the end of the year. Many firms choose to enter a manual journal entry for the last day of their fiscal year to bring the Retained Earnings balance to zero; however, this is not required.
For more information, refer to Knowledge Base Article R11590, “All About Retained Earnings.”
