It is important to make sure your financial reporting periods are setup correctly so that the end of year process automates correctly.
Changing dates of financial reporting periods
Once a financial year is complete you can lock your reporting period, to prevent transactions from being entered.
The Year End process
At the end of a financial reporting period, Clear Books will run an automated process to update the Historic retained earnings of the new financial reporting period.
This process calculates the sum of the Historic retained earnings, the total Cumulative profit/loss and Dividends balances to give the Historic retained earnings balance of the new financial reporting period.
In this example below, the balance sheet shows 0 for Historic retained earnings, 2,995 for the total Cumulative profit/loss and -200 for Dividends.
The combined balance would be 2,795 and this will be reflected in the balance sheet for Historic retained earnings of the new financial year.
Why does the Retained Earnings balance appear differently when I click on the value on the Trial Balance report?
The movement explained in the end of year process above does not create a transaction in the Historic retained earnings account as there is no Cumulative profit/loss account to Debit or Credit. The Cumulative profit/loss line on the balance sheet dynamically updates based on the accumulated profit or loss balance taken from the Profit & Loss report.
Sometimes you might find that the balance shown on the Trial Balance report for retained earnings (the same balance for Historic retained earnings on the balance sheet) is different to the balance shown when you click on the value (this redirects you to the Transaction report for retained earnings).
If you create transactions in Clear Books that debit or credit the retained earnings account, the retained earnings Transaction report will only show the balances of these transactions you have created. The movement explained in the end of year process will not be reflected in the Transaction report.
Any transactions that debit or credit retained earnings will however be shown within the Historic retained earnings balance on the balance sheet or trial balance report.