Question about "Income Statement" and "Balance Sheet"

gison

We all known the Income statement account at the year end will be transfered to Balance Sheet account.
There are two questions I need to be explained.

1. What's the action cause this transfer?
2. Why system know which Income statement account should be transfer which Balance sheet account?


Hope guys understand what i'm talking...
Regards,
Ray

andrejsm

1. What's the action cause this transfer?
General Ledger -> Periodic Activities -> Fiscal Year -> Close income statement

2. Why system know which Income statement account should be transfer which Balance sheet account?
You will be requested to input one Balance account, when you will run Close income statement procedure.

gison

hi andrejsm,

Sorry for not having Navision on-hand now.
For the second question, as you said while we run close income statement system will ask which balance sheet account should be transfered.
Do you mean all the balance on each income statement account will be transfered to this specific balance sheet account?

Regards,
Ray

ssingla

gison wrote:

hi andrejsm,

Sorry for not having Navision on-hand now.
For the second question, as you said while we run close income statement system will ask which balance sheet account should be transfered.
Do you mean all the balance on each income statement account will be transfered to this specific balance sheet account?

Regards,
Ray

This is how the accounting works. The balance of income-expenditure/Profit-Loss should be transferred to capital account/General reserve (The account name may differ based on accounting policy and rule of land) at the period end.