23 Replies Latest reply: May 28, 2011 3:49 PM by nikki saju RSS

Retained a/c balance mismatch

nikki saju
Currently Being Moderated

when I view the closing balance of Retained earning a/c for the year 2009 it is 14,78,900.  But when I view the opening balance of the same account in 2010, it gives another figure 12,60,991.  Why this is so.  The closing balance in the previous year and the opening balance of the next year should be matched, right ?

  • Re: Retained a/c balance mismatch
    Atif Farooq
    Currently Being Moderated

    Dear:

                    Refer to the following link for successful GL migration.

                    http://www.mynvtech.com/images/Migrating_to_New_GL_pros_and_Cons.pdf

                    Regards

    • Re: Retained a/c balance mismatch
      nikki saju
      Currently Being Moderated

      I am wondering why you have forwarded me a document for NEW GL Migration to my query.

      • Re: Retained a/c balance mismatch
        Atif Farooq
        Currently Being Moderated

        Dear:

                       Apologies this happened due to oversight , well the differences you are encountering in this account is due to the

        fact that this account is a "Retained Earnings account". Check the SAP Note 176067.

        as designed.

         

        Retained earning is basically a profit account in which profit accumulates yearly

         

        With balance carry forward, the P+L accounts are C/F

        to the retained earnings accounts on the balance sheet

        . No documents are created, the balance C/F

        can therefore not be carried out via the line item display.

         

        The opening balance on a retained earnings account consists of:

        Opening balance = Closing balance of the previous year

        + Retained earnings from the P+L accounts

         

        So the opening balance on a retained earnings account does

        not match to the closing balance of the previous year.

        Regards

  • Re: Retained a/c balance mismatch
    Shilpa Ambiti
    Currently Being Moderated

    Hi,

     

     

    Retained earnings is the balances that is accumulated  with the yearly profit or loss we have incurred in the business.

    It is the difference in the incomes and expenses that is accumulated.

     

    As we know incomes and expesnes will be moved to retained earnings and the next year  begining  balances of the incomes and expenses will be 0.

     

    Balance sheet items will be carried forward for the next year, hence the closing balance in the prior year will be ea\qual to the begining balances in the new year.

     

     

    The closing balance of retained earnings will not match with the opening balance of the next year.

     

    For example :

     

    On 31.03.2011 (Fisacl Year 2010) we have got the Profit/loss from the incomes and expenses is Rs100.

     

    On 31.03.2011 And your retained earnings (accumulated ) which is on 31.03.2011in Rs.150

     

     

    On  01.04.2011 The retained earnings will be  Rs. 250  ( Rs.150 (Accumulated before) + 100  (Profit earned in Fiscal year 2010)).

     

    This is because of the concept that the profits are accumulated every year.

     

    Hope this helps,

     

    Thanks,

    Shilpa.

    • Re: Retained a/c balance mismatch
      nikki saju
      Currently Being Moderated

      I have verified the figures as follows:

       

      Closing balance : year 2009   : 11,300,998.00

      Opening balance : year 2010 : 13,807,445.00

       

      I hope the closing balance of 2009 should match with that of the opening balance of 2010.  Where the thing has gone wrong ?

      • Re: Retained a/c balance mismatch
        nikki saju
        Currently Being Moderated

        one more thing : 

         

        When I double click on the amount 13,807,445.00 in the period balance of Retained earnings a/c, the drilled down line items only show 11,300,998.00.

         

        hence the mismatch is between the period balance (FS10n) and line item display (FBL3n) of the GL account for Retained Earnings account.

        • Re: Retained a/c balance mismatch
          Siva Reddy.S
          Currently Being Moderated

          Hi Nikitha,

           

          just check the from to dates of the report.

           

          FBL1N Shows balances year wise.

           

          FBL3N shows balances from to date wise. Just check FBL3N by giving dates from 31-03-2010 to 31-03-2011.

           

          This will solve your problem. In FBL3N the opening balances from the previous year wont be show.

           

           

          Thanks & Regards,

          Shashi Kanth.

      • Re: Retained a/c balance mismatch
        Atif Farooq
        Currently Being Moderated

        Dear:

                   You can match the Retained earning Carried forward balance with previous year closing balance as

                    For example for 2010( closed period).. Retained earning a/c shows 2.5 Billion in FS10N

                    But for 2011 when you execute FS10N you find  4.5 Billion ( you wanted this to match with closing balance of 2010  which was 2.5 Billion)

                    To match this balance take profit for the year 2010 from financial statement S_PL0_86000028, add this to retained earning account balance for 2010 . Your closing balance for 2010 will match with opening balance of 2011.

        Regards

        • Re: Retained a/c balance mismatch
          nikki saju
          Currently Being Moderated

          I am afraid you have not understand my issue.  My issue is : When I double click on a figure in the FS10n display, the sum of individual line items drilled down from that figure are not the same.

          • Re: Retained a/c balance mismatch
            Atif Farooq
            Currently Being Moderated

            Dear:

                       Can you please check that have there been any manual  entry  posted to retained earning GLs. In this account only balances are carried forward . No direct entry is posted. Since there is no document generated for Balance in Retained earning account so if you double click on the cumulative balance you will never see any line item for that balance amount but if there is any manual entry posted to it then obviously system generated a document and when you double click on the cumulative retained earning balance then it will show a line item posted to manually.

            Regards

            • Re: Retained a/c balance mismatch
              nikki saju
              Currently Being Moderated

              Ok.  You mean to say the line items which I double click in the retained earning account are manually posted items ?  Retained accounts will not have any line items if the system has posted through program ?

              • Re: Retained a/c balance mismatch
                Murali Babu Nallamothu
                Currently Being Moderated

                Hi,

                 

                Retained earnings account you can set in OB53.

                Usually it doesn't have any line items as system transfer the balances from P&L accounts to this account(Virtual entry)

                If you find any balances, those are posted by manually only.

                 

                Rgds

                Murali. N

              • Re: Retained a/c balance mismatch
                Atif Farooq
                Currently Being Moderated

                Dear:

                                Yes you are right. If there are manual postings to Retained earning accounts then they will be shown in the form of line items. You can see them in FS10N that in which period and by which user they were posted. Its the violation of fundamental accounting principal to post an entry in Retained earning accounts. I hope your query is resolved and you should close it.

                Regards

                • Re: Retained a/c balance mismatch
                  nikki saju
                  Currently Being Moderated

                  hence I have a genuine doubt.  If we want to transfer certain portions of retained earnings account to provisions, we will have to make adjustment postings to retained earnings account manually, right ?  Or should it be done out of SAP ?

                  • Re: Retained a/c balance mismatch
                    Atif Farooq
                    Currently Being Moderated

                    Dear:

                                A retained earning clearing account will do the job for you if you want direct debits to RE account which occurs in rare cases at the bottom of your P&L and can post a journal entry to the account from the offset and roll forward the P&L again in to RE. E.g an offset account for release of retained earnings by way of dividends . Hence the possibility of creating an offset (clearing a/c) account for understating profit in the retained earnings cannot be ruled out . A Journal entry would be sufficient to transfer an amount from the retained earnings account to the counterpart account. In this regard i would again assert that  the basic data flow into the retained earnings usually happens automatically as a transfer of profit or loss from the P & L account. Hope it will clear now.

                    Regards

                  • Re: Retained a/c balance mismatch
                    Murali Babu Nallamothu
                    Currently Being Moderated

                    At the time of apportionment, obviously you have to post manual entries to retained earnings account. This apportionment is fixed in AGM(Annual general meeting).

                  • Re: Retained a/c balance mismatch
                    nikki saju
                    Currently Being Moderated

                    any inputs, please ?

                    • Re: Retained a/c balance mismatch
                      Atif Farooq
                      Currently Being Moderated

                      Dear Nikkitha:

                                                 I had a detailed meeting with my company CFO regarding RE behavior for posting year adjustments for special provisions like  bonus shares, stock dividends which as matter of financial prudence cant be kept in company accounts e.t.c. He was of the view that at year end in Public limited companies where it is a normal practice to declare right share, bonus share, stock dividends its a normal practice to debit RE account and create provisions for these balances and then carry forward the remaining balance to the next fiscal year. If you are keeping you RE account on line item basis then at year end you have provision to debit RE account for meeting statutory requirements and then carry forward the closing balance to the next year.

                      Regards

  • Re: Retained a/c balance mismatch
    nikki saju
    Currently Being Moderated

    Thanks. Let me verify

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