Purpose

The purpose of this article is to clarify the basic customizing steps of creating a Retained Earnings account.

Overview

Retained Earnings account defines the (P&L Account) to be used for posting the expenditure and incomes of the year. The balance of this account appears as Reserves & Surplus in the Balance Sheet for the year. In this case we show how to configure an account of this kind in the SAP system. SAP offers two options:

01. Using One Retained Earnings Account - Normally, companies use one retained earnings account.
02. Using Several Retained Earnings Accounts- By having more than one P+L statement account type in the FI system, you are able to specify several retained earnings accounts.

Create the Account

Enter Transaction code SPRO in the command field

 

 

In the next screen Select 'SAP Reference IMG'

 

In next screen ”Display IMG”  navigate the following menu path :

SAP Customizing Implementation Guide -> Financial Accounting -> General Ledger Accounting
-> G/L Accounts -> Master Data -> Preparations -> Define Retained Earnings Account

 

 

In the next screen,  enter the Chart of Accounts to maintain the Retained Earnings Account

 

In the next screen, select New Entries from the 'Application Menu'

 

 

In the next screen, Enter the following information

1. Enter the P&L statement account type, to determine the retained earnings account for each P&L account.If you are creating a P&L account, you must make an entry here.
2. Enter the G/L Account which will be considered as Retained Earnings account

 

 

You can maintain the posting key for this account by selecting "posting key" in the Application Menu

After this you can assign posting key for Debit and Credit.

After maintaining all required information press save

and enter your "change request number"

 

 

Your Retained Earnings account has now been created.

 

 

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