Accounting Special Features in Income Statement FI G/L Accounts

Before you can include income statement accounts in the chart of accounts, you need to specify the retained earnings account to which profits or losses are transferred. There is a special program designed to transfer these amounts to this account. Therefore, you must define the number of the retained earnings account in the system.

You will assign every income statement account to a retained earnings account by entering a key in the P+L statement account type field in the chart of accounts section of master records for these accounts. This key is assigned the number of the retained earnings account to which profits and losses are automatically posted. For more information, see the General Ledger Accounting Implementation Guide.

Using One Retained Earnings Account

Since companies generally use one retained earnings account, and it is thus effective to use X as the key. In the chart of accounts you enter X in the P+L statement account type field, and for account determination you enter the retained earnings account under the key X.

Using Several Retained Earnings Accounts

By having more than one P+L statement account type in the FI system, you are able to specify different retained earnings accounts for particular profit and loss accounts.

You would use different retained earnings accounts in an international corporate group to meet various requirements for preparing financial statements (See Using Several Retained Earnings Accounts: Example).