Special Features in Income Statement Accounts

Before you can include income statement (P&L) 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. In order for this program to be able to carry forward the profit or loss, you have to enter the number of this retained earnings account in the system.

Each income statement account is assigned to a retained earnings account via a key. You have to enter this key in the income statement account type field found in the chart of accounts area of each income statement account.

You create the retained earnings account and related key in Financial Accounting Customizing under Start of the navigation path General Ledger Accounting Next navigation step G/L Accounts Master Data G/L Account Creation Preparations Define Retained Earnings Account End of the navigation path .

Using One Retained Earnings Account

Normally, companies use one retained earnings account. For this reason, X can be used as the key. In the chart of accounts you enter X in the income statement account type field, and for account determination you enter the retained earnings account under the key X.

This graphic is explained in the accompanying text.

Using Several Retained Earnings Accounts

By having more than one income statement account type in the FI system, you are able to specify several retained earnings 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.