FI Configuration-05: Define Retained Earnings Account




If you’re new to accounting, you should read our article about Financial Reports (Balance sheet and Profit & Loss Statement).

Retained earning account is an Equity account (of a Balance sheet) that records cumulative (from year to year) net income/loss which is retained by the corporation rather than distributed to its owners as dividends.

In the closing procedure of financial report (e.g. annually), the balance of Profit & Loss (P&L;) Statement accounts are carried forward to a retained earnings account, and the Profit/Loss statement accounts is set to zero.

Retained Earning = Retained Earning from previous period + Net Income – Dividends.

In the creation of a P&L; account (“FS00” T-code), we must assign a retained earning to it by specifying P&L; statement account type in the chart of Accounts (COA). If there is only one retained earnings account, SAP will automatically uses the one defined in customizing. If there are more than one retained earnings account, during P&L; account creation, we must choose the retained earnings account per P&L; account like this:

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We can define Retained Earnings Account with “OB53” T-code or through “SPRO” T-code menu: Financial Accounting – General Ledger Accounting – G/L Accounts – Master Records – Preparations – Define Retained Earnings Account.

You can download video training of How to define retained earnings account.

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4 thoughts on “FI Configuration-05: Define Retained Earnings Account

  1. dear Rizki,

    i'm using SAP R/3 4.7, couldnt fing field "P&L; Statement Acocunt Type" in the tab Type?Description of tcode FS00.

    could u please give me a clue?

    thank you in advance.

    Many Thanks,
    abu hary
    Indonesia

  2. Dear Abu Hary,
    As the above explanation: "If there is only one retained earnings account, SAP will automatically uses the one defined in customizing. If there are more than one retained earnings account, during P&L; account creation, we must choose the retained earnings account per P&L; account."
    I guess in your company code there's only one retained earning account.

  3. Thanks for the info, it’s easy to understand. BTW, if anyone needs to fill out a Retained Earning Account Form, I found a blank form here: http://goo.gl/oCHM8r. This site also has some tutorials on how to fill it out and a few related tax documents.

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