How to distribute retained earnings uncovered loss. Accounting for the formation and use of retained earnings. How to control the financial position of the company

How is the formation and use of retained earnings of an enterprise reflected in accounting? How retained earnings interact with others constituent parts own capital? What are the sources of reimbursement? uncovered loss? We will try to answer all these questions in this article.

Formation of retained earnings (uncovered loss)

The formation of retained earnings (uncovered loss) is carried out by the final turnovers of December:

• Debit 99 “Profit and loss” Credit 84 “Retained earnings (uncovered loss)”- if profit was received based on the results of work for the year;
• Debit 84 "Retained earnings (uncovered loss)" Credit 99 "Profit and loss"- if a loss is received as a result of work for the year.

Example 1

The credit balance on account 99 "Profit and Loss" at the end of the day on December 31, 2013 is 4,890,116.35 rubles.

As part of the balance sheet reformation, an entry will be made:

Increasing retained earnings…

… upon disposal of previously revalued items of property, plant and equipment

Upon disposal of an item of property, plant and equipment in accordance with the last paragraph clause 15 PBU 6/01 "Accounting for fixed assets" the amount of its revaluation is transferred from additional capital to retained earnings by posting Debit 83 "Additional capital" Credit 84 "Retained earnings (uncovered loss)".

Example 2

The enterprise sold the object of fixed assets for 118,000 rubles, including VAT - 18,000 rubles. The book value of the object is 122,765.36 rubles, depreciation is 49,611.20 rubles. On the additional capital, there is a balance of revaluation of the object in the amount of 28,823.55 rubles. The transfer of the object to the buyer took place on April 14, 2014, the funds were received on April 16, 2014.

Contents of operation	Debit	Credit	Amount, rub.
14.04.2014
Fixed asset depreciation written off	02	01	49 611,20
Written off the residual value of the asset (122,765.36 - 49,611.20) rubles	91-2	01	73 154,16
Recognized income from the sale of fixed assets	62	91-1	118 000
VAT charged	91-2	68	18 000
The amount of the revaluation was written off in connection with the disposal of the object	83	84	28 823,55
16.04.2014
Cash received from the sale of fixed assets	51	62	118 000
30.04.2014
Profit from sale recognized as part of closing turnovers (118,000 - 18,000 - 73,154.16) rubles	91-9	99	26 845,84

The accounting entry on the write-off of additional capital to retained earnings upon disposal of the object does not change the amount of equity, since both additional capital and profit represent parts of it. However, profit, unlike additional capital, has an open list of spending areas. The revaluation fund received on the account of retained earnings can be safely spent, including for the payment of dividends, since earlier the revaluation amount was charged to expenses by accruing depreciation. Writing off the revaluation fund to profit only restores the amount of previously underestimated profit.

… at the expense of participants (shareholders)

In accordance with pp. 3.4 p. 1 art. 251 Tax Code of the Russian Federation shareholders or participants have the right to transfer property, property rights or non-property rights to the enterprise in order to increase net assets. By decision of the owners, these funds can be credited to increase retained earnings.

Example 3

On April 10, 2014, the sole participant of LLC decided to replenish the profit by 1 million rubles. in order to increase the net assets of the company. The funds were transferred on 04/10/2014.

The following entries will be made in accounting:

* To account 75 “Settlements with founders”, other than the provided sub-accounts can be opened, for example 75-3 “Other settlements with founders”.

Repayment of uncovered loss...

Since account 84 is active-passive, repayment of an uncovered loss can be considered as special case formation of retained earnings. Operations are also made on the credit of account 84, but they do not increase the credit balance (retained earnings), but reduce the debit balance (uncovered loss).

…due to reserve capital

Based paragraph 69 of the Regulations on maintaining accounting and financial statements in the Russian Federation reserve capital is used to cover losses. Covering the loss at the expense of the reserve capital is made on the debit of account 82 "Reserve capital" and the credit of account 84 "Retained earnings (uncovered loss)".

Example 4

According to the data for 2013, the uncovered loss of JSC amounted to 1,890,378 rubles. The reserve capital is 634,120 rubles. On March 12, 2014, the Board of Directors made a decision to partially cover the loss at the expense of reserve capital.

If the amount of the resulting loss is greater than the amount of the accumulated reserve capital, the undistributed profit of previous years or the funds of shareholders (participants) may be directed to pay off the loss.

…due to retained earnings

In this case, two situations are possible:

1) to cover the uncovered loss of the reporting year, participants (shareholders) use retained earnings of previous years;

2) to pay off the uncovered loss of previous years, participants (shareholders) use retained earnings of the reporting year. Recall that the losses of previous years in the presence of net profit of the reporting year do not cancel the rights of owners to dividends. The legislation links the payment of dividends to the amount of net assets, but not to the overall balance of the retained earnings account.

Repayment of losses of previous years is reflected in the posting Debit 84 “Retained earnings (uncovered loss)”, subaccount “Retained earnings (uncovered loss) of the reporting year” Credit 84 “Retained earnings (uncovered loss)”, subaccount “Retained earnings (uncovered loss) of previous years”.

This posting is not of the technical nature of the transfer within account 84, it requires the minutes of the meeting of participants (shareholders).

The repayment of the loss of the reporting year is reflected in the posting Debit 84 “Retained earnings (uncovered loss)”, subaccount “Retained earnings (uncovered loss) of previous years” Credit 84 “Retained earnings (uncovered loss)”, subaccount “Retained earnings (uncovered loss) of the reporting year”.

Usually such entries are made in the event that the reserve capital has already been spent.

Example 5

Let's supplement example 4 with initial data. Retained earnings of previous years is 2,032,188 rubles. The meeting of shareholders on April 14, 2014 decided to cover the loss remaining after the use of the reserve capital at the expense of retained earnings of previous years - 1,256,258 rubles. (1 890 378 - 634 120).

* Separate sub-account "Retained earnings (uncovered loss) of previous years".

** Separate sub-account "Retained earnings (uncovered loss) of the reporting year".

… at the expense of participants (shareholders)

Under action pp. 3.4 p. 1 art. 251 Tax Code of the Russian Federation, which allows you to increase the net assets of the enterprise with the funds of shareholders (participants), repayment of uncovered losses is also suitable. The help of shareholders (participants) is vital precisely at the moment when the enterprise incurs losses, since this threatens bankruptcy and liquidation of the enterprise. Therefore, the coverage by the owners of the loss acts as the most common occurrence restoration of the value of the net assets of the enterprise. Accounting entries will be similar to those discussed in example 3.

…at the expense of authorized capital

The legislation provides for a case in which repayment of an uncovered loss is made at the expense of the authorized capital. If the value of the company's net assets remains less than its authorized capital at the end of the financial year following the second financial year or each subsequent financial year, at the end of which the value of the company's net assets turned out to be less than its authorized capital, the company no later than six months after the end of the relevant financial year is obliged to take one of the following decisions: 1) reduce the authorized capital to an amount not exceeding the value of its net assets, 2) liquidate the company ( paragraph 6 of Art. 35 of the JSC Law,paragraph 4 of Art. 30 of the LLC Law).

A decrease in the authorized capital to an amount not exceeding the value of the company's net assets is reflected in the accounting entry Debit 80 "Authorized capital" Credit 84 "Retained earnings (uncovered loss)".

Example 6

The meeting of participants of the LLC decided to reduce the authorized capital by 670,000 rubles. (from 1 million rubles to the value of net assets of 330,000 rubles) by reducing the nominal value of the shares of all participants. Registration of changes in the charter was made on 22.04.2014.

Use (distribution) of net profit…

The distribution of net profit is carried out on the basis of a decision of the general meeting of shareholders (participants). The list of directions for spending net profit is open, and most of the purposes of its use are specifically prescribed in the legislation:

• formation of reserve capital ( paragraph 1 of Art. 35 of the JSC Law, paragraph 1 of Art. 30 of the LLC Law);
• dividend payment ( paragraph 2 of Art. 42 JSC Law, Art. 28 of the LLC Law);
• increase the authorized capital ( paragraph 5 of Art. 28 JSC Law, Art. 18 LLC Law);
• formation of a shareholding fund for employees ( paragraph 2 of Art. 35 of the JSC Law);
• repayment of uncovered loss ();
• creation of special purpose funds ( paragraph 1 of Art. 30 of the LLC Law);
• other purposes ( pp. 11 p. 1 art. 48 JSC Law).

…for the formation of reserve capital

In accordance with paragraph 1 of Art. 35 of the JSC Law joint-stock companies obliged create a reserve fund; in accordance with item 1Art. 30 of the LLC Law limited liability company Maybe create a reserve fund.

Deductions to reserve capital from profit are reflected in the credit of account 82 "Reserve capital" in correspondence with account 84 "Retained earnings (uncovered loss)".

Example 7

The size of the reserve capital of the enterprise, provided for by its constituent documents, is 10% of the authorized capital. The amount of annual deductions is 10% of net profit. At the time of the meeting of the Board of Directors (03/12/2014), the authorized capital was 15 million rubles, the reserve capital was 834,890 rubles; the net profit of the enterprise for 2013 amounted to 2,411,120 rubles.

According to the charter, the reserve capital should be 1.5 million rubles. (15 million rubles × 10%). Due to the net profit of 2013, the company can create a reserve capital in the amount of 241,112 rubles. (2,411,120 rubles × 10%). Until the value provided for by the charter is reached, it is necessary to accrue additional reserve capital in the amount of 665,110 rubles. (1,500,000 - 834,890). The Board of Directors decided to allocate 241,112 rubles for the creation of reserve capital. net profit in 2013.

…to pay dividends

According to the direction of part of the profit of the reporting year for the payment of income to the founders (participants) of the enterprise, following the approval of the annual financial statements, it is reflected in the debit of account 84 “Retained earnings (uncovered loss)” and the credit of accounts 75 “Settlements with the founders” and 70 “Settlements with personnel for payment labor." A similar entry is made in the payment of intermediate income.

Example 8

The participants of Krapiva LLC are two persons: Vershina LLC (75% share) and N. A. Tarasov (25% share); N. A. Tarasov is also an employee of Krapiva LLC. The general meeting of participants dated March 25, 2014 decided to pay dividends to the participants in proportion to their shares for 2013 in the total amount of 300,000 rubles. Dividends were paid on 03.04.2014. Krapiva LLC itself in 2013 did not receive dividends from other persons.

The following entries will be made in the accounting records of Krapiva LLC:

Contents of operation	Debit	Credit	Amount, rub.
25.03.2014
Vershina LLC dividends accrued (300,000 rubles × 75%)	84	75-2	225 000
Dividends accrued to N. A. Tarasov (300,000 rubles × 25%)	84	70	75 000
03.04.2014
Income tax withheld from Vershina LLC (225,000 rubles × 9%)	75-2	68	20 250
Personal income tax withheld from the income of N. A. Tarasova (75,000 rubles × 9%)	70	68	6 750
Dividends of Vershina LLC are transferred (225,000 - 20,250) rub.	75-2	51	204 750
Dividends were transferred to N. A. Tarasov (75,000 - 6,750) rubles	70	51	68 250

…to increase the authorized capital

Net profit is used to increase the authorized capital, when such an increase is made not at the expense of contributions from shareholders (participants), but at the expense of the property of the enterprise itself. At the same time, the amount by which the authorized capital of the company is increased at the expense of the property of the company must not exceed the difference between the value of the net assets of the company and the amount of the authorized capital and reserve capital (fund) of the company ( par. 2 p. 5 art. 28 JSC Law, paragraph 2 of Art. 18 LLC Law).

An increase in authorized capital due to retained earnings is reflected in the entry Debit 84 "Retained earnings (uncovered loss)" Credit 80 "Authorized capital".

Example 9

The general meeting of shareholders of the CJSC decided to increase the authorized capital by 2 million rubles. by increasing the nominal value of shares at the expense of a part of retained earnings of previous years. Registration of changes in the charter was made on 03/25/2014.

…for the formation of additional capital

Based on the allowable Instructions for using the Chart of Accounts correspondence between accounts 83 "Additional capital" and 84 "Retained earnings (uncovered loss)" and taking into account the freedom of expression of the will of the owners, we can conclude that retained earnings can be used to replenish additional capital.

Example 10

The meeting of shareholders decided a part of the net profit for 2013 in the amount of 1 million rubles. direct to increase additional capital (minutes dated April 22, 2014).

The following entry will be made in the accounting records:

…for the purchase of property

The acquisition of fixed assets does not cause the expenditure of net income. However, on the basis Instructions for using the Chart of Accounts the enterprise has the right to organize accounting of sources of capital investments, and in this case account 84 will be involved.

The use of profit for the acquisition of property, plant and equipment is accounted for in the following entries:

• Debit 01 "Fixed assets" Credit 08 "Investments in non-current assets"- the object is credited to fixed assets;
• and at the same time Debit 84 “Retained earnings (uncovered loss)” Credit 84 “Retained earnings (uncovered loss)”, subaccount “Retained earnings aimed at the acquisition of fixed assets”- net income is directed to the acquisition of property.

Example 11

The accounting policy of the enterprise provides for the accounting of sources of financing of capital investments. On April 15, 2014, the company received an item of fixed assets at a price of 118,000 rubles, including VAT of 18,000 rubles. The object was put into operation on 17.04.2014.

Contents of operation	Debit	Credit	Amount, rub.
15.04.2014
Acquired property	08	60	100 000
"Input" VAT included	19-1	60	18 000
17.04.2014
The acquired property is accepted for accounting as part of the asset	01	08	100 000
"Input" VAT accepted for deduction	68	19-1	18 000
The source of financing is reflected	84	84*	100 000

* Sub-account "Retained earnings aimed at the acquisition of fixed assets".

…for other purposes

The owners of the enterprise have the right to spend net profit for other purposes, for example, to encourage employees, charitable purposes, to finance social events, cultural and sports events, etc. However, the Ministry of Finance believes that Instructions for using the Chart of Accounts it is not provided for the reflection of expenses of enterprises on account 84 “Retained earnings (uncovered loss)” ( letters dated 19.12.2008 No. 07‑05‑06/260 , dated 19.06.2008 No. 07‑05‑06/138 ). The Ministry of Finance recommends reflecting such expenses as other expenses based on clause 11 PBU 10/99 "Expenses of the organization". According to the author, attributing non-production costs to expenses or profits is a matter not only of accounting, but also of civil law. Not every shareholder (participant) will tolerate if costs that are not directly related to making profit are written off without going through the procedure of agreement with the owner.

Because the Chart of accounts there are no debit transactions on account 84, and owners cannot gather for each debit transaction, special purpose funds are created from profits. Chart of accounts no separate balance sheet account has been allocated to account for funds formed at the initiative of the enterprise. Therefore, you can use either account 84 “Retained earnings (uncovered loss)”, or account 76 “Settlements with other debtors and creditors”. When accounting for special purpose funds on account 84 “Retained earnings (uncovered loss)”, a contradiction again arises with the explanations of the Ministry of Finance. According to the author, although special-purpose funds are intended for use, they are not obligations to creditors in the classical sense of the word. Therefore, the unspent balance of these funds is fair to take into account on account 84 as part of equity. If we rely on the opinion expressed by the Ministry of Finance, then it is more legitimate to use account 76 “Settlements with other debtors and creditors”, which has practically no restrictions on correspondence with other accounts. But in any case, account 91-2 “Other expenses” is not used to account for expenses from profit.

Example 12

The OJSC provides for the formation of a fund for corporatization of employees. According to the accounting policy, the corporatization fund is accounted for on a separate sub-account of account 84 "Retained earnings (uncovered loss)". The balance of the fund is 3.6 million rubles.

On the balance sheet of the OJSC there are 1,890 shares purchased from shareholders at a redemption price of 2,470 rubles. per piece, totaling 4,668,300 rubles. On April 16, 2014, the Board of Directors decided to distribute 1,000 shares free of charge among the top managers of the enterprise, for which the funds from the employee corporatization fund should be used.

The entry in the register of shareholders was made on 24.04.2014.

In accounting, the OJSC will make the following entries:

Conclusion

It is more profitable for an enterprise to keep its own capital in net profit, and not in authorized or additional capital. With profit, you can quickly restore losses, replenish the authorized capital, if its minimum size is increased by law, and increase other funds as part of equity capital. The higher the size of retained earnings, the further the enterprise is from the threat of bankruptcy and the more optimistic its prospects are.

Retained earnings (loss) of the reporting year is an important indicator that indicates the productivity of the company. Undistributed is the part of the profit that remains under the control of the company after making payments and has not yet been directed either to the development of capacities or to the payment of dividends. The distribution of profits is the prerogative of the owners of the company, and this happens on the basis of the minutes of the meeting of shareholders, where the corresponding decision is recorded. We will learn how accounting for retained earnings (NP) is carried out.

Retained Earnings: Formula

There is an opinion that retained earnings are net income. This is true if the company has not accrued dividends in the reporting year and has no deferred tax liabilities. The differences between retained earnings (NP) and net profit (NP) are only in scope: NP is the result of the enterprise's work for the entire period of the company's existence and the reporting year, NP is the result of the company's activities in the current period. Often it is net income that acts as retained earnings.

When calculating the amount of retained earnings (uncovered loss), they operate on the values ​​​​of its presence at the beginning of the year, the PE (or loss) for the year and the amounts of dividends paid to owners. For JSCs, these are payments to shareholders, for LLCs - to the founders.

Depending on the final result of the company's activities, the calculation formula is slightly modified:

• With the profit received, it is as follows - NP k \u003d NP n + PE - D, where NP k and NP n are the values ​​\u200b\u200bof NP at the beginning and end of the period, D - payments to owners;
• With an admitted loss - NP k \u003d NP n - U - D, where U is a loss.

Retained earnings: account

To combine information about the actual presence and dynamics of the amounts of retained earnings or uncovered loss, there is an account of the same name 84.

The NP calculation mechanism is activated at the end of the year when the balance sheet is reformed, i.e. closing of resultant accounts 90 and 91 at the end of the financial year when preparing reports. Closing account 90, the accountant transfers the balance to account 99 “Profit and Loss”, displaying the results from the sale of products or services provided:

• D / t 90 - K / t 99 - profit received;
• D / t 99 - K / t 90 - a loss was made.

Operations related to non-sales are reflected in the account of other costs and income - 91. At the end of the year, the accountant closes the 91st account, transferring the balance to the 99th:

• D / t 91 - K / t 99 - for the amount of calculated profit;
• D / t 99 - K / t 91 - for the amount of the loss.

The balances of other accounts are also transferred to the 99th account, forming the results of the work for the year. In the future, the accountant writes off the final balance of the 99th account on the 84th, reflecting the entries:

• D / t 99 - K / t 84 - if profit is received;
• D / t 84 - K / t 99 - if a loss is made.

To fix the amount of profit for the current period, the company can create sub-accounts to the account. 84. For example, take into account the profit in the current period on the account. 84/1, NP reflect on the account. 84/2, and the use of profits - on account. 84/3. The profit of the reporting year within the account will be reflected in the entry D / t 84/1 - K / t 84/2, and postings using the account. 84/3 - fix the distribution of profits for different purposes.

After accounts 90, 91, 99 are closed, completely reset to zero, they will begin to be used again only next year. Before reflecting the amount of NP in the reporting, it is reduced by the amount of income tax (D / t 99 - K / t 68).

Accounting and use of retained earnings

Reflection of the value of NP on the loan c. 84 achieves the determination of the amount of accumulated profit at the end of the reporting period. Its use is documented by the minutes of the meeting of owners, and it can be directed to various needs. For example:

Operation
Payment of income to the owners of the company after the approval of the annual financial statements
Personnel bonuses
Part of retained earnings is directed to:
To increase the size of the authorized capital		80 (for AO) 75 (for LLC)
To replenish the reserve capital
For additional capital gain
To pay off established losses of past periods
For investment

Analytical accounting for accounts. 84 is usually organized in such a way as to inform the user as much as possible in the directions of using the funds. Guided by the convenience in reflecting the use of profits, they separately group funds already aimed at ensuring the development of the company or acquiring assets and not yet used.

Uncovered loss

To fix the loss made in the reporting year, a separate sub-account can be created - 84/4. If its value is not covered by the profit of previous periods, then the founders of the company make a decision to repay it by other sources, or leave it in the balance sheet. In this case, it becomes uncovered and is entered with a minus value in line 1370 of the balance sheet.

Various funds and reserves serve as sources for covering losses. The wires can be:

Analysis of retained earnings: as evidenced by the increase or decrease in the indicator

When analyzing NP, it is necessary to evaluate the change in its share in the amount of equity capital. A decrease in retained earnings indicates a decrease in the company's business activity. However, before drawing such conclusions, it is necessary to examine the structure of equity capital and take into account the fact that the amount of NP in many respects is determined by the company's accounting policy. In addition, a decrease in NP is often preceded by the identification of errors that led to an overestimation of income, and, accordingly, a decrease in NP.

But if retained earnings increased, this indicates:

• Accumulation of NP (but if it is not put into circulation, investing in projects or stimulating the same investors, then soon the company's income may decrease due to a decrease in the competitiveness of manufactured goods, wear and tear of equipment, loss of attractiveness, etc.);
• Identification of reporting errors that led to overestimation of expenses;
• The presence of unclaimed dividends, since the accrual of which more than 3 years have passed.

The most acceptable for investors is a company that invests the funds remaining after the payment of dividends in its own development.

retained earnings(or loss that was not covered) at the end of the reporting period is displayed in line 1370 of the balance sheet. It records the result obtained on an accrual basis over several years.

Is it true that retained earnings are net income?

Retained earnings are really net profit, which (as the name implies) was not distributed (shared) among the participants / shareholders of the company. Net profit is that part of income from sales and non-sales operations that remains after taxes.

The decision on how to distribute this income is made solely by the owners. Traditionally, the issue of retained earnings is put on the agenda of the annual meeting of the company's owners. The adopted decision is formalized in the minutes, which is drawn up on the basis of the results of the general meeting of participants/shareholders.

The main ways of spending retained earnings are its direction:

• to pay dividends to participants/shareholders;
• repayment of past losses;
• replenishment (creation) of reserve capital;
• other goals formulated by the owners.

Is retained earnings an asset or a liability?

Retained earnings on the balance sheet is, of course, his liability. The value of this indicator indicates the actual debt of the company to its owners, since ideally this profit should be distributed among the participants and invested in the further development of the business.

In fact, the company cannot dispose of retained earnings without a decision by the owners. The loss reflected in line 1370 is also on the passive side of the balance sheet, only this is a negative value, so the number is taken in parentheses.

Our article will help you better deal with balance analysis "How to read the balance sheet (practical example)?" .

Retained earnings and uncovered loss - what is it?

As mentioned above, retained earnings are the final income received by the company from its economic activities, remaining after the transfer of income tax and not yet divided (not directed to other purposes) by its owners.

Example 1

LLC "Voskhod" in 2018 received a profit in the amount of 800,000 rubles, paid income tax in the amount of 160,000 rubles. In line 1370, in the liabilities side of the balance sheet at the end of 2018, Voskhod LLC should reflect 640,000 rubles. This is retained earnings.

The value in line 1370 of the balance sheet may be equal to that indicated in line 2400 of the income statement if the company had no profit not distributed by the owners at the beginning of the year, and no interim dividends were paid during the year.

Our article will help you read the balance lines correctly "Deciphering the lines of the balance sheet (1230, etc.)" .

As for the uncovered loss, this is the excess of the company's expenses over income at the end of the year.

Example 2

Parus-Trade LLC in 2018 received revenue from the provision of services and other non-operating income. Their total amount was 400,000 rubles.

The costs associated with the conduct of the main activity (transportation) are equal to 380,000 rubles. Other expenses of the company (not taken into account for tax purposes) amounted to another 58,000 rubles. Accrued income tax in the amount of 4,000 rubles. Parus-Trade LLC has no reserve capital.

This means that at the end of 2018, after the reformation of the balance sheet, an entry of 42,000 rubles will appear in parentheses in line 1370. (400,000 - 380,000 - 4,000 - 58,000).

An uncovered loss occurs when the company receives an actual loss and there are no funding reserves. The value entered in the liabilities side of the balance sheet in parentheses will reduce the total for section 3 of the balance sheet.

Among the main reasons for receiving an uncovered loss are:

• obtaining an actual negative financial result from the company's activities due to the excess of costs over income;
• changes in the accounting policy that had an impact on the financial condition of the company (this is directly stated in clause 16 of PBU 1/2008, approved by order of the Ministry of Finance of Russia dated 06.10.2008 No. 106n);
• errors found in the current year, made in previous years, that affected the financial result (subclause 1, clause 9, PBU 22/2010, approved by order of the Ministry of Finance of Russia dated June 28, 2010 No. 63n).

Read more about PBU 1/2008 in the material " PBU 1/2008 "Accounting policy of the organization" (nuances) " .

How retained earnings of previous years are displayed

Undistributed profits of previous years are accumulated on account 84. The balance on the credit of this account is transferred to the balance sheet line 1370. Usually, there should be no movement on the debit of the account during the year, since the distribution of profits traditionally occurs at the end of the year after the annual meeting of the owners of the company.

Retained earnings of the reporting year

The credit balance at the end of the year on account 99 is net profit. When reforming the balance sheet, it is debited to accounting 84 (Dt 99 Kt 84) and amounts to retained earnings at the end of this reporting year.

In order to separate the indicators of retained earnings of the current (reporting) year from last year, some accountants single out separate lines 1372 and 1372 in the balance sheet, which respectively reflect the retained earnings of the reporting period and previous years.

The use of retained earnings is the prerogative of the company's owners. And the allocation in the balance sheet of this financial indicator for different years First of all, it's convenient for them. But it should be borne in mind that the retained earnings of the past year cannot be fully distributed without taking into account the previous results of the company's activities.

IMPORTANT!It must not be allowed that the value of the company's net assets after the transfer of retained earnings of the reporting year for payment of dividends becomes less than the size of the company's authorized capital even if there is a reserve fund. The caution applies to cases where uncovered losses were recorded in the accounts in previous years. The decision to cover last year's losses at the expense of retained earnings of the reporting year is made exclusively by the owners of the company.

But retained earnings for previous years can be distributed by the participants / shareholders of the company not only at the end of the year, but at any time. The main thing is to hold a thematic meeting of all the owners of the company and approve the appropriate decision.

Retained earnings: calculation formula

According to generalized accounting data, retained earnings are the net profit of the company after taxes, which can be distributed by the owners of the company.

Based on global financial practice, retained earnings (hereinafter referred to as NP) are calculated using the following formula:

NPk \u003d NPn + PE - Div,

NPk - NP at the end of the reporting year;

NPn - NP at the beginning of the reporting period;

PE - net profit remaining after the accrual of income tax;

Div - dividends paid in the reporting year based on the NP of previous years.

If you do not have the NP value, then you can use the following scheme to calculate the NP:

• first calculate profit before tax (to determine it, calculate operating profit, which is defined as the difference between operating income and operating expenses);
• then deduct depreciation, interest costs from operating profit;
• deduct tax from the resulting profit value.

Indicators for investors

Analyzing the financial condition of the company, investors pay attention to the use of retained earnings. If NP accumulates and is not put into circulation, this state of affairs should seem to suit investors, since they can count on substantial dividends.

However, without investment in activities, the company stops growing, and its income not only does not increase, but may even decrease (due to a drop in competitiveness, high wear and tear of equipment, and other reasons related to the lack of investment). So a company that accumulates profits but does not invest in its activities cannot be attractive.

At the same time, a company that does not make a profit and does not pay dividends cannot be of interest to investors at all.

An ideal option for investors is a company that invests the funds remaining after the payment of dividends in its development. Although the owners may decide not to pay dividends and direct the entire volume of NP into circulation.

Results

To reflect retained earnings (profit remaining after the withdrawal of the amount of income tax from it, or net profit) in the balance sheet, there is a separate line. The figure entered into it corresponds to the value of the entire net profit accumulated over the years of the company's activity. During the reporting year, the value of retained earnings related to this year in accounting can be seen on a separate accounting account. Dividends are paid out of net profit.

Assets

• stocks and goods
• cash.

Liabilities

• loans and credits,
• accounts payable.

balance structure.

In the analysis of the structure of Liabilities

• fast-acting,
• average realizable,
• slowly implemented
• difficult to implement.

• short-term
• medium-term
• long-term,
• permanent.

Presence of retained earnings

Page 1

The presence of retained earnings does not indicate the presence of free Money. The fact that a firm has significant retained earnings does not necessarily mean that it has enough cash to invest.

The presence of retained earnings in the amount necessary to finance an investment also indicates the availability of sufficient cash for this.

Accounting for retained earnings

In the presence of retained earnings of the reporting period, reflected in the balance sheet in line 480, but in the absence of retained earnings of previous years (balance line 470) and free balances of special purpose funds, current costs at the expense of profit are also reflected in the debit of account 88, subaccount Costs due profits not covered by funding sources and line 330 of the third section of the balance sheet asset.

The dividend yield is usually lower than the full yield due to the presence of retained earnings.

Within the framework of such large territorial production complexes as feasibility studies, it is advisable to create an insurance fund at the expense of the retained part of the profit remaining at the disposal of industrial energy associations and enterprises, of course, in the presence of retained earnings.

In the letter of the State Tax Service of the Russian Federation dated October 27, 1998 No. ShS-6-02 / 768 Guidelines on certain issues of taxation of profits, paragraph 2 emphasizes that the change in the procedure for accounting for the use of profits of the reporting period, introduced by the Order of the Ministry of Finance of the Russian Federation of November 21, 1997, in the presence of undistributed profits of the reporting year, cannot serve as a basis for not granting benefits.

An increase in the share of own funds at the expense of any of the listed sources contributes to the strengthening of the financial stability of the enterprise. At the same time, the presence of retained earnings can be considered as a source of replenishment of the enterprise's working capital and a decrease in the level of short-term accounts payable.

All profit remaining at the disposal of the enterprise is divided into profit that increases the value of the property, i.e. participating in the process of accumulation, and the profit directed to consumption, which does not increase the value of the property.

What is retained earnings in the balance sheet

If the profit is not spent on consumption, then it remains in the enterprise as retained earnings of previous years and increases the size of the enterprise's own capital. The presence of retained earnings increases the financial stability of the enterprise, indicates the presence of a source for subsequent development.

The study of the structure of the balance sheet liabilities allows us to establish one of the possible causes financial instability (stability) of the organization. So, for example, an increase in the share of own funds from any of the sources helps to strengthen the financial stability of the organization. At the same time, the presence of retained earnings can be considered as a source of replenishment of working capital and a decrease in the level of short-term accounts payable.

The study of the structure of the balance sheet liability allows us to establish one of the possible reasons for the financial instability (stability) of the enterprise. So, for example, an increase in the share of own funds at the expense of any of the sources contributes to the strengthening of the financial stability of the enterprise. At the same time, the presence of retained earnings can be considered as a source of replenishment of working capital and a decrease in the level of short-term accounts payable.

The study of the structure of the balance sheet liability allows you to establish one of the possible reasons for the financial instability of the enterprise, which can lead to its insolvency. Such a reason may be a high share of borrowed funds (over 50%) in the structure of sources of financing of economic activity. At the same time, an increase in the share of own sources in the currency of the balance sheet liabilities indicates an increase in the financial stability and independence of the enterprise from borrowed and borrowed funds. At the same time, the presence of retained earnings can be considered as a source of replenishment of working capital.

The study of the structure of the balance sheet liabilities allows us to establish one of the possible reasons for the financial instability of the enterprise, which led to its insolvency. Such a reason may be a high share of borrowed funds (over 50%) in the structure of sources of financing of economic activity. At the same time, an increase in the share of own sources in the currency of the balance sheet liabilities indicates an increase in the financial stability and independence of the enterprise from borrowed and borrowed funds. At the same time, the presence of retained earnings can be considered as a source of replenishment of working capital. The assets of the enterprise and their structure are studied both from the point of view of their participation in the production process, and from the point of view of assessing their liquidity. The most marketable assets include cash and short-term securities; to the most hard-to-sell assets, fixed assets and other non-current assets.

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How to read a balance sheet: simple rules of thumb

The balance sheet is the final document that allows you to understand the financial condition of the enterprise. It is an analysis of the company's assets, the sources of these assets, as well as the company's liabilities.

Assets- These are the resources of the enterprise, they are able to bring economic benefits. Balance sheet items are arranged from less liquid to more liquid:

• fixed assets and capital construction in progress,
• stocks and goods
• cash.

Liabilities are the sources of asset formation:

• accumulated profit of the enterprise,
• loans and credits,
• accounts payable.

The balance sheet items are arranged according to the degree of urgency of the return.

All articles have data for 3 reporting periods (3 calendar years).
It is the availability of data for several periods that makes it possible to analyze the balance sheet.

It is customary to carry out a horizontal analysis (analysis of balance sheet items) and a vertical analysis (analysis of changes over time in the share of each balance sheet item).

Visually check the correctness of the document, filling in all required details, signatures and stamps.

The presence of a change in the balance sheet currency (if the balance sheet currency has decreased, this is an alarming sign).

balance structure.
Analysis of the structure of Assets. The ratio of current and non-current assets.

Studying the composition of non-current assets, determining the share of fixed assets.
If the share of fixed assets in the composition of non-current assets is large, then in order to maintain financial stability, the enterprise must have a high share of equity as the main source of financing.
Studying the composition of current assets, determining the state of settlements with consumers. The increase in accounts receivable is a negative factor, indicating that the company provides its customers with payment deferrals in amounts exceeding the amount of funds received in the form of deferrals from commercial creditors.

In the analysis of the structure of Liabilities balance, we pay attention to the amount of equity capital (authorized capital and accumulated profit). The increase in the share of funds and retained earnings indicates effective work enterprises.

In the structure of borrowed funds of the enterprise, we pay attention to the share of long-term loans and credits, as they increase the financial stability of the enterprise. An increase in short-term debt means a decrease in turnover.

According to the degree of liquidity, Assets are divided into:

• fast-acting,
• average realizable,
• slowly implemented
• difficult to implement.

According to the degree of urgency, liabilities are divided into:

• short-term
• medium-term
• long-term,
• permanent.

The company must conduct its financial activity so that the sums of assets and liabilities of one group coincide. Which is extremely rare in reality.

Therefore, a financial condition is considered normal in which:

1. short-term financial investments, cash and short-term receivables are covered by short-term loans and accounts payable;
2. inventories, long-term receivables and non-current assets are covered by authorized capital, reserves and funds and retained earnings.

For a correct understanding of the structure of the balance sheet, it is necessary to understand that in different sectors of activity the same indicator can mean different results.

It is considered normal for trade enterprises if part of the inventory (goods for resale) is financed by accounts payable or short-term loans.

If such a situation develops at a manufacturing enterprise, this may mean that there is a threat to the solvency of the enterprise in view of overstocking, lack of sales of products.

Financiers use the balance sheet to calculate the liquidity ratios, solvency and financial stability of the enterprise, as well as the calculation of the net assets of the enterprise.

These ratios are especially important if the company intends to obtain borrowed funds from a credit institution (bank loan).

Balance sheet indicators provide a reliable picture of the financial condition of the enterprise.

The balance sheet is the final document that allows you to understand the financial condition of the enterprise. It is an analysis of the company's assets, the sources of these assets, as well as the company's liabilities.

Assets- These are the resources of the enterprise, they are able to bring economic benefits. Balance sheet items are arranged from less liquid to more liquid:

• fixed assets and capital construction in progress,
• stocks and goods
• cash.

Liabilities are the sources of asset formation:

• accumulated profit of the enterprise,
• loans and credits,
• accounts payable.

The balance sheet items are arranged according to the degree of urgency of the return.

All articles have data for 3 reporting periods (3 calendar years).
It is the availability of data for several periods that makes it possible to analyze the balance sheet.

It is customary to carry out a horizontal analysis (analysis of balance sheet items) and a vertical analysis (analysis of changes over time in the share of each balance sheet item).

Visually checks the correctness of the document, filling in all the required details, signatures and seals.

The presence of a change in the balance sheet currency (if the balance sheet currency has decreased, this is an alarming sign).

balance structure.
Analysis of the structure of Assets. The ratio of current and non-current assets.

Studying the composition of non-current assets, determining the share of fixed assets.
If the share of fixed assets in the composition of non-current assets is large, then in order to maintain financial stability, the enterprise must have a high share of equity as the main source of financing.
Studying the composition of current assets, determining the state of settlements with consumers. The increase in accounts receivable is a negative factor, indicating that the company provides its customers with payment deferrals in amounts exceeding the amount of funds received in the form of deferrals from commercial creditors.

In the analysis of the structure of Liabilities balance, we pay attention to the amount of equity capital (authorized capital and accumulated profit).

An increase in the share of funds and retained earnings indicates the effective operation of the enterprise.

In the structure of borrowed funds of the enterprise, we pay attention to the share of long-term loans and credits, as they increase the financial stability of the enterprise. An increase in short-term debt means a decrease in turnover.

According to the degree of liquidity, Assets are divided into:

• fast-acting,
• average realizable,
• slowly implemented
• difficult to implement.

According to the degree of urgency, liabilities are divided into:

• short-term
• medium-term
• long-term,
• permanent.

The enterprise must conduct its financial activities in such a way that the amounts of assets and liabilities of one group coincide. Which is extremely rare in reality.

Therefore, a financial condition is considered normal in which:

1. short-term financial investments, cash and short-term receivables are covered by short-term loans and accounts payable;
2. inventories, long-term receivables and non-current assets are covered by authorized capital, reserves and funds and retained earnings.

For a correct understanding of the structure of the balance sheet, it is necessary to understand that in different sectors of activity the same indicator can mean different results.

It is considered normal for trade enterprises if part of the inventory (goods for resale) is financed by accounts payable or short-term loans.

If such a situation develops at a manufacturing enterprise, this may mean that there is a threat to the solvency of the enterprise in view of overstocking, lack of sales of products.

Financiers use the balance sheet to calculate the liquidity ratios, solvency and financial stability of the enterprise, as well as the calculation of the net assets of the enterprise.

These ratios are especially important if the company intends to obtain borrowed funds from a credit institution (bank loan).

Balance sheet indicators provide a reliable picture of the financial condition of the enterprise.

The first months of the year are the time for summing up. It is worth thinking about the fate of retained earnings. Consider who has the right to use it and what you can spend it on.

The final entry in December, the amount of net profit (loss) of the reporting year is written off from account 99 "Profits and losses" to the credit (debit) of account 84 "Retained earnings (uncovered loss)". So, on account 84, after the balance sheet is reformed, a financial result is formed, which will be announced at the general meeting of shareholders (participants). If, as a result, the organization has a debit balance on account 84, this, unfortunately, indicates that the main goal entrepreneurial activity not reached: the organization has received a loss. If account 84 has a credit balance, this indicates that the organization has retained earnings that can be used.

What is retained earnings?

First, it is part of the capital of the organization. No wonder it is reflected in Sect. III "Capital and reserves" balance sheet. And capital is nothing more than the difference between an organization's assets and its liabilities.

But if assets and liabilities are associated with real objects, then capital is a kind of abstract financial value, which shows from what sources the organization exists: authorized, additional or reserve capital, retained earnings. For example, in the Chart of Accounts for accounting for the financial and economic activities of organizations (hereinafter referred to as the Chart of Accounts), approved by Order of the Ministry of Finance of Russia dated October 31, 2000 N 94n, in the commentary to account 84, retained earnings are directly named as a source of financial support for the production development of the organization.

Accordingly, if the organization's capital contains such a component as retained earnings, this is a very good sign and indicates that the organization earns more than it spends.

Secondly, the credit of account 84 shows the amount of net profit received for the entire period of activity organizations, not just Last year. This value represents the final result of the company's activities for the entire time of its existence, and the owners have the right to dispose of this accumulated profit at their discretion.

Thirdly, the credit balance of account 84 indicates that the profit of the organization was not aimed at withdrawing funds from the company's turnover. What this means is explained below.

Who is entitled to use retained earnings

To distribute the earned profit, to decide what expenses should be made at its expense, only the owners of organizations have the right: shareholders or participants. It is not for nothing that accountants among themselves call account 84 "account of the owner." In accordance with the current legislation, the decision on its distribution is made by the general meeting of shareholders (participants) (clause 3, clause 2, article 67.1 of the Civil Code of the Russian Federation, clause 11, clause 1, article 48 of the Law of December 26, 1995 N 208-FZ "On joint-stock companies" (hereinafter referred to as the JSC Law), subclause 7, clause 2, article 33 of the Law of February 8, 1998 N 14-FZ "On Limited Liability Companies" (hereinafter referred to as the LLC Law)).

Accordingly, the accounting decision of the participants (shareholders) will depend on the instructions that they record in the minutes of the general meeting and give to the management of the organization.

However, when making this decision, many, unfortunately, make mistakes. It is the accountant who can suggest the right decision to shareholders and participants. And our task is to help him in this.

What can and should be spent on retained earnings

The procedure for distributing profits is regulated by the Laws on JSC and LLC. As for accounting, what can be spent on retained earnings is said only in the annotation to account 84 in the Chart of Accounts. There is no more mention of how retained earnings can be spent in accounting regulations.

So, let's see what the profit is spent on.

reserve fund

For joint-stock companies, the Law provides duty on the formation of a reserve fund at the expense of net profit. Its size must be at least 5% of the authorized capital of the company (clause 1, article 35 of the JSC Law). They “spend” the fund to cover losses (in most cases), as well as to buy back their own shares and redeem their own bonds (paragraph 3, clause 1, article 35 of the JSC Law).

Limited liability companies, unlike joint-stock companies, can create a reserve fund on a voluntary basis (clause 1 of Art.

Financial analysis of the balance sheet

30 of the LLC Law). The size of the reserve, the amount of annual deductions to it and the purposes for which the fund can be spent (it is usually also used to cover losses by LLC) are prescribed in the company's charter.

The reserve fund is created by posting:

Debit 84 "Retained earnings (uncovered loss)" Credit 82 "Reserve capital".

In the balance sheet, it, like retained earnings, is reflected in sec. III "Capital and reserves" on line 1360. Thus, part of the net profit is actually transferred to another item of capital. But at the same time, the structure of the balance sheet improves, since the owners are actually prohibited from withdrawing funds from the company's turnover (for example, paying dividends) for the amount of the formed fund. It can be said that the reserve fund is a kind of financial safety cushion for organizations.

Dividends

The profit remaining after the formation of the reserve fund, the owners can direct to the payment of dividends. It should be noted that this is the most common way to use profits. The accrual of dividends reduces retained earnings, and their payment leads to a decrease in the organization's assets (money or property).

In accounting, the accrual of dividends will be reflected in the following entry:

Debit 84 "Retained earnings (uncovered loss)" Credit 75 "Settlements with founders".

Dividend payment money should be reflected in the wiring:

Debit 75 "Settlements with founders" Credit 51 "Settlement accounts".

If the money was previously withdrawn from the current account for issuing it in cash, then the posting will be as follows:

Debit 75 "Settlements with the founders" Credit 50 "Cashier".

Dividends can be paid not only in money, but also in property, because the current legislation does not prohibit this. According to the Federal Tax Service of Russia, when transferring property on account of the payment of dividends, VAT must be charged (Letter of the Federal Tax Service of Russia dated May 15, 2014 N GD-4-3 / [email protected], agreed with the Ministry of Finance of Russia).

It should be noted that there are some judgments, in which the arbitrators agree that the transfer of property in payment of dividends is not a sale and is not recognized as an object of VAT (Resolution of the Federal Antimonopoly Service of the Urals District of May 23, 2011 in case N A07-14871 / 2010). Therefore, if an organization does not include in the VAT base the value of property transferred to pay dividends, then it will most likely have to defend its position in court. But is it worth it? After all, if an organization decides to pay dividends in cash, but it does not have them, then first it sells the property, calculates VAT on its sale, and only then transfers the funds to shareholders (participants). In other words, in any case, in the absence of funds, you will first have to pay VAT and only then pay off the owners.

If, however, goods or fixed assets are transferred as dividends, the sale of which is not subject to VAT (for example, land), then it is not necessary to charge VAT.

transfer property on account of repayment of debt on payment of dividends in accounting are reflected as follows:

1) when transferring goods or finished products:

2) when transferring a fixed asset:

Account correspondence
75 (sub-account "Settlements with the founders for the payment of dividends")	91-1 (sub-account "Other income")	Reflected the transfer of fixed assets on account of the payment of dividends
		Reflected VAT
	01 (sub-account "Fixed asset in operation")	Reflected the initial cost of fixed assets (OS)
	01 (sub-account "Retirement of fixed assets")	Amount of accumulated depreciation written off
91-2 (sub-account "Other expenses")	01 (sub-account "Retirement of fixed assets")	Residual value of fixed assets recognized as an expense

Is it legal to use profits in any other way?

Sometimes the owners of the organization make decisions on the payment of bonuses to employees at the expense of profit, material assistance, and the acquisition of fixed assets. Some decide to create so-called consumption and accumulation funds. Is it correct?

First, let's deal with expenses at the expense of profits. First, the JSC and LLC Laws do not provide for any payments from profits to anyone other than the owners. As we have already noted, account 84 "Retained earnings (uncovered loss)" is the account of the owners, respectively, only they are entitled to receive dividends.

Secondly, the Ministry of Finance of Russia has repeatedly expressed the opinion that account 84 is not intended to reflect all kinds of social and charitable expenses, payments of material assistance and bonuses (Letters of the Ministry of Finance of Russia dated 06/19/2008 N 07-05-06 / 138, dated 19.12. 2008 N 07-05-06/260 and others).

From the point of view of the financial department, the expenses of the organization for the implementation of sports events, recreation, entertainment, cultural and educational events and other similar events, as well as the transfer of funds (contributions, payments, etc.) related to charitable activities by the organization, are other expenses and should be accounted for under account 91 "Other income and expenses". Only the payment of dividends is not an expense of the organization, any other disposal of assets is an expense of the current period (clause 2 of the Accounting Regulation "Organization's expenses" PBU 10/99, approved by Order of the Ministry of Finance of Russia dated 06.05.1999 N 33n).

Therefore, all kinds of bonuses, material assistance and charity expenses will also affect the net profit of the organization, but only in the period of these expenses. They have nothing to do with last year's net profit.

Thus, all kinds payments from net profit, with the exception of dividends, are illegal.

As for the formation of the consumption fund at the expense of net profit, this is simply an echo of Soviet accounting. Then real money was transferred to the production development funds, which were kept in the bank separately from the organization’s funds, and it was with this money that fixed assets were acquired (commentary to account 87 of the invalid Instructions on the Application of the Chart of Accounts for Accounting for the Production and Economic Activities of Associations, Enterprises and Organizations, approved by the Order of the Ministry of Finance of the USSR dated March 28, 1985 N 40). Today, no one transfers the money intended for the development of production anywhere.

When acquiring fixed assets, organizations simply spend funds from the current account and one asset (money) is exchanged for another (fixed asset). Account 84 in postings is not involved at all. Therefore, if the owners of the organization decide to direct the profit to the development of production, and the accountant makes an entry in the accounting Debit 84, sub-account "Profit for distribution", Credit 84 "Reserved profit", this does not affect the final balance on the credit of account 84.

By and large, this posting only indicates that the owners refused to receive dividends this year and decided not to withdraw funds from the company's turnover. But such a decision will allow the organization to improve the structure of the balance sheet, make its financial position more stable. But since the final balance on the credit of account 84 will not change, nothing prevents the owners of the organization from distributing the profit reflected in the balance sheet as undistributed in the future.

Is it possible to distribute the profits of previous years

Another question that worries both owners and accountants: is it possible to distribute the profits of past years as dividends? The answer is yes. Can. After all, neither tax nor civil legislation contains restrictions on the payment of dividends from the profits of previous years. Therefore, if the organization has "accumulated" the profit of previous years, the general meeting of shareholders (participants) can send it to pay dividends.

Neither the regulatory authorities object to this (clause 1 of the Letter of the Federal Tax Service of Russia dated 05.10.2011 N ED-4-3 / [email protected], Letter of the Ministry of Finance of Russia of March 20, 2012 N 03-03-06 / 1/133), nor the courts (Decree of the Presidium of the Supreme Arbitration Court of the Russian Federation of June 25, 2013 N 18087/12, Decision of the Supreme Arbitration Court of the Russian Federation of November 29, 2012 N VAC-13840 / 12) . The Supreme Arbitration Court of the Russian Federation came to the conclusion that, by their economic nature, net profit and retained earnings are identical, therefore, nothing prevents owners from deciding to pay dividends not only from the net profit of the reporting year, but also from retained earnings of previous years.

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• Purpose of the article: reflection of information about the undistributed financial result of the current year and previous years.
• Line in the balance sheet: 1370.
• Numbers of accounts included in the line: account balance 84 (debit or credit).

in detail

At the end of the year, at the general meeting of shareholders of the company or the founders of the organization, a decision is made on the distribution of the company's net profit. The part of the financial result that was not distributed among the participants is recognized as retained earnings of the current year. If the financial result is negative, information about the uncovered loss of the company appears.

In the accounting of the company, retained earnings or uncovered loss are recorded on account 84. It displays the unallocated financial result of the current year and previous periods separately for different sub-accounts.

Note from the author! Account 84 is active-passive, so there may be a debit balance (the amount of outstanding loss) and a credit balance (the amount of retained earnings), depending on the performance of the company.

Line 1370 of the balance sheet of financial statements refers to the Capital and reserves section of the passive part of the balance sheet: it reflects the company's own capital in terms of retained earnings. Information for all years is summarized and displayed in one line. Also, this line records information on losses uncovered by the relevant sources of financing for the current year and previous periods.

retained earnings

Line 1370 - part of the net profit not spent on the needs of the organization.

Note from the author! In accounting, net profit is understood as the final positive financial result of the company's activities, which remains after the repayment of all obligations in terms of paying mandatory taxes, fees, and insurance contributions to the budget.

According to the accounting rules, the financial result of the enterprise is displayed in Kt99. At the end of the year, a balance sheet reform procedure is carried out (closing of all main accounting accounts). One of the results of this procedure is the transfer of the balance from Kt99 to Dt84 in terms of undistributed income of this period.

Retained earnings can be spent on the following needs:

• payment of dividends to shareholders or founders of the company;
• increase in the size of the authorized capital of the company (after the official registration of changes in the constituent documentation);
• creating reserves: transferring part of retained earnings to the company's reserve capital;
• repayment of losses of previous years.

Note! During the year, there can be no movements on Dt84 without the decision of the founders of the company.

Uncovered loss

Losses as a result of the activities of the organization may be formed in the following cases:

• the costs of the company exceed the income received both from the main activity and from operations not related to the main financial and economic activity;
• significant errors of previous reporting periods were identified;
• made adjustments to the company's accounting policies.

Line 1370 of the balance sheet - a reflection of losses that were not covered by possible sources of financing. historical data and this year summed up.

Sources of loss coverage:

• means of the statutory fund: bringing the value of the statutory fund to the net assets of the company.

  Retained earnings - where can they be used and who makes the decision?

  The reduction of the authorized capital must be carried out within the limits established by law ( minimum threshold for public JSCs - 100 thousand rubles, for non-public JSCs and LLCs - 10 thousand rubles).

• means of the company's reserve fund;
• targeted investment by the founders of the organization (contributions of the company's owners that do not affect the distribution of shares and the amount of the authorized capital);
• retained earnings of previous years.

Regulatory regulation

The use of account 84 to generate information on the presence of undistributed profit of the company at the end of the year (occurrence of uncovered loss) is carried out in accordance with the Chart of Accounts and other regulatory documents.

Practical examples of accounting for retained earnings (uncovered loss)

Example 1

In 2017, the proceeds from the sale of goods of Solnyshko LLC amounted to 2 million rubles (excluding VAT). The cost of goods that were sold amounted to 1 million rubles (purchase from suppliers, transportation, etc.). Other expenses of the company - 70 thousand rubles.

Business operations

930 thousand rubles - net profit of LLC.

From the final financial result of the company, income tax was paid to the budget.

186 thousand rubles - settlements with the Federal Tax Service of Russia.

After the balance sheet reformation procedure, the following posting was made

744 thousand rubles - displayed retained earnings of the company.

In the balance sheet of Solnyshko LLC at the end of 2017, in line 1370 there will be an amount of 744 thousand rubles.

Example 2

As a result of the analysis of the financial and economic activities of the company "YAR", a loss was identified based on the results of activities in 2017. The loss as of 01/01/2018 amounted to 40 thousand rubles. The founders of the company decided to cover the loss at the expense of their own targeted financing.

Business operations

15 thousand rubles - cash deposit by the founders.

25 thousand rubles - transfer of funds by the founders to the company's current account.

40 thousand rubles - the loss was covered by the targeted contributions of the founders.

Common entries in retained earnings (uncovered loss)

1. Balance reform procedure

   Dt99 Kt84 - retained earnings.

   Dt84 Kt99 - identification of uncovered loss.

2. Loss write-off

   Dt84 Kt84 - at the expense of income from previous periods.

   Dt82 Kt84 - means of the authorized capital.

   Dt75 Kt84 - targeted financing of the founders.

   Dt80 Kt84 - bringing the statutory fund to the value of net assets.

Questions and answers on the topic

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Related reference materials

Answer

The terms "net profit" and "retained earnings" are close in meaning. At the same time, the term "retained earnings" is more often used in the meaning - profit accumulated for the reporting year and previous years. The term "net profit" is more often used in the meaning - profit for the reporting year.

Retained earnings and net profit are determined minus the amount of corporate income tax (the amount of tax is deducted from the amount of profit before tax).

Retained earnings (uncovered loss) is indicated in line 1370 of the balance sheet, as part of capital (Order of the Ministry of Finance of the Russian Federation of July 2, 2010 N 66n "On the forms of financial statements of organizations").

Retained earnings in the balance sheet and net income in form 2 do not match

This line indicates the accumulated retained earnings (uncovered loss) as of the reporting date (for all periods, including previous ones).

Net income (loss) indicated in line 2400 of the Statement of Financial Performance. This line shows the net profit of the reporting year (not including the profit of previous periods) (Order of the Ministry of Finance of the Russian Federation of 02.07.2010 N 66n "On the forms of financial statements of organizations").

Example

At the beginning of the year (January 1), the balance sheet includes 2,500 thousand rubles of retained earnings. In the current year, net profit amounted to 600 thousand rubles.

Based on this example:

Retained earnings at the beginning of the reporting year 2,500 thousand rubles.

Net profit for the current year amounted to 600 thousand rubles.

Retained earnings at the end of the reporting year 3,100 thousand rubles (2,500 + 600).

Relationship between net profit and retained earnings

If the financial statements are correct, then:

Retained earnings at the end of the reporting year must be equal to the Retained earnings at the beginning of the reporting year, increased by the amount of the net profit of the reporting year and reduced by the amount of retained earnings spent in the reporting year.

NPk = NPn + ChP - NPi

NPK - Retained earnings at the end of the reporting year (indicated in line 1370 of the Balance Sheet at the end of the year)

NPn - Retained earnings at the beginning of the reporting year (indicated in line 1370 of the Balance Sheet at the beginning of the year)

NPi - Retained earnings spent in the reporting year (for example, to pay dividends)

PE - Net profit of the reporting year (indicated in line 2400 of the Statement of Financial Results)

Additionally

Retained earnings (uncovered loss) - profit (loss) for the entire period of the organization's existence, remaining after paying income tax and other similar mandatory payments.

Net profit (loss) - profit (loss) of the reporting period, remaining after paying income tax and other similar obligatory payments

Unused net profit of previous years can be used only for the purposes determined by the charter of the company or by decision of the general meeting of participants in the LLC.

Other expenses, including those not taken into account for taxation, the organization is not entitled to reflect on account 84, but must reflect on account 91. This also applies to losses of previous years identified in the reporting year.

Rationale for the conclusion. The distribution of profits falls within the exclusive competence of the general meeting of participants in a limited liability company (clause 3, clause 3, article 91 of the Civil Code of the Russian Federation, clause 7, clause 2, article 33 federal law dated February 8, 1998 No. 14-FZ "On Limited Liability Companies" (hereinafter - Law No. 14-FZ)).

The direction of using the net profit of the reporting year and previous years is determined by the decision of the general meeting, which, in turn, is reflected in the minutes of the general meeting. This is the document that determines the procedure for using net profit (clause 6, article 37 of Law No. 14-FZ).

In some cases, net profit may be distributed without an additional decision of the general meeting of participants in the organization. So, the charter of the company may determine for what purposes the company is entitled to use the net profit, and it may also provide for the procedure for directing net profit to the creation of reserve and other funds (clause 1 of article 30 of Law No. 14-FZ), to pay off losses of past years. The amount of profit allocated for these purposes may also be determined by the charter. However, the decision to direct the net profit for these purposes can also be made by the participants of the company at the general meeting.

The net profit received as a result of the financial and economic activities of a limited liability company may be directed by decision of the general meeting of participants to:

Increase in the authorized capital (Articles 17, 18 of Law No. 14-FZ);

Repayment of losses of previous years;

Payment of dividends (Articles 28, 29 of Law No. 14-FZ);

Formation of the organization's reserve capital (Article 30 of Law No. 14-FZ);

Production development of the organization (for example, the cost of paying for fixed assets);

Creation of special purpose funds (Article 30 of Law No. 14-FZ):

Social Sphere Fund;

Consumption fund (bonuses for employees, financial assistance), etc.

Retained earnings are an integral part of the organization's equity capital. The capital of the organization is the most important characteristic of its economic reporting.

The definition of the organization's capital is given in clause 7.4 of the Accounting Concept in the Market Economy of Russia (approved by the Methodological Council for Accounting under the Ministry of Finance of the Russian Federation, the Presidential Council of the IPA RF on December 29, 1997): "Capital is the investment of owners and profit accumulated over the entire period of the organization's activities ".

In other words, the capital of the organization consists of:

Investment capital (authorized capital and additional capital);

Accumulated capital (capital created in excess of what was originally invested by the owners in the organization: retained earnings and reserve capital).

Thus, along with authorized capital profit accumulated over the entire period of the organization's activity should be reflected in the balance sheet in full for the entire period of its activity, despite the fact that these funds, being in circulation, can be used by the organization in the course of its activity.

In accordance with paragraph 83 of the Regulation on accounting and financial reporting in the Russian Federation, approved by order of the Ministry of Finance of Russia dated July 29, 1998 No. 34n (hereinafter - Regulation No. 34n), retained earnings (uncovered loss) is the final financial result revealed for the reporting period minus taxes due from profits established in accordance with the legislation of the Russian Federation and other similar mandatory payments, including sanctions for non-compliance with taxation rules.

So, undistributed net profit of previous years is the balance of profit remaining at the disposal of the organization based on the results of work for the past reporting years after taxation.

In accordance with the letter of the Ministry of Finance of Russia dated August 23, 2002 No. 04-02-06 / 3/60, retained earnings of previous years represent that part of the profit that remained at the disposal of the organization based on the results of work for the last reporting year and the decisions made on its use (direction in reserves formed in accordance with the legislation or constituent documents, to cover losses, to pay dividends, etc.).

Accounting for retained earnings (uncovered loss) is kept on account 84 of the same name "Retained earnings (uncovered loss)" (Chart of accounts for accounting for the financial and economic activities of organizations and instructions for its use, approved by order of the Ministry of Finance of Russia dated October 31, 2000 No. 94n).

Analytical accounting on account 84 should provide information on the directions of use of funds. At the same time, in analytical accounting, retained earnings used as financial support for the production development of the organization and other similar measures for the acquisition (construction) of new property and profits that have not yet been used can be separated. In this regard, the organization has the right to open the necessary sub-accounts for this account.

Thus, by decision of the general meeting of LLC participants, drawn up by the minutes, retained earnings on account 84 can be directed to the purposes specified by the specified document and reflected in sub-account entries:

Debit 84, subaccount "Retained earnings" Credit 84, subaccount "Direction of funds for ..."

Part of retained earnings directed to financing ..., to pay ..., etc .;

and after use based on documents:

Debit 84, sub-account "Direction of funds for ..." Credit 84 "Use of funds for ..."

The use of funds for ... (specify purposes) is reflected.

According to paragraph 4 of PBU 10/99 "Expenses of the organization", the expenses of the organization, depending on their nature, conditions for implementation and areas of activity of the organization, are divided into:

Expenses for ordinary activities;

Other expenses.

Expenses other than expenses for ordinary activities are considered other expenses.

Other expenses are listed in clauses 11-13 of PBU 10/99, and, in particular, include losses from previous years recognized in the reporting year.

Based on clause 80 of Regulation No. 34n, profit or loss identified in the reporting year, but related to operations of previous years, are included in the financial results of the organization of the reporting year.

In accordance with the instructions for applying the Chart of Accounts, other expenses are reflected in the debit of account 91, sub-account "Other expenses". This instruction does not provide for the reflection of the expenses of the organization on account 84.

Thus, other expenses, including those not taken into account for taxation, the organization is not entitled to reflect on account 84. This conclusion also applies to losses of previous years identified in the reporting year.