The profit (or loss) for the year is calculated automatically when you create the balance sheet and P&L statement. You do not have to make the traditional postings of debiting profit account and crediting the equity account (or crediting the loss account and debiting the equity account). In the financial statement version, you define the items that represent asset accounts, liability accounts, owner’s equity accounts, and profit and loss statement accounts. Accounts that are not assigned are listed as unassigned items and displayed at the end of the financial statement report. The combined balance of the accounts assigned to balance sheet items (asset, liabilities, and owner’s equity) equals the profit/loss for the year. The system also determines the profit and displays it in the appropriate line of the profit and loss statement and equals the profit shown in the balance sheet if all relevant accounts are assigned. You do not have to close out the profit and loss statement accounts using a profit account.

• Profit or loss from previous years

The profit (or loss) carried forward from previous years is taken from the retained earnings account (see the diagram above), provided you have assigned the account to this item in the financial statement version. The balance from the profit and loss statement accounts is carried forward to this account by the balance carry forward program. No document is created. The retained earnings account is debited in the new year if the company uses the retained earnings.