Forum Message

Non attributed funds and balancing account

Hi
I understand that the balancing account should be zero with the assets = liabilities + equity. If you have funds in the business tha have not yet been allocated to a specific expense or tax liability or withdrawn as a dividend (allocated as you recommend to retained earnings) how should you account for them? Any suggestions welcome. Thanks


Posted by Yvonne Barker on May 6, 2011 2:01 PM BST

Hi Yvonne,

That depends on how the money got into the business in the first place. If you are self-employed and you deposited the money from your personal funds, set the Owners Capital opening balance to the value of that money.

Regards,


Posted by Mark McLaren (Solar Accounts) on May 6, 2011 2:15 PM BST

We are a small limited company switching to using solar accounts. The money is not owner capital but earnt income from the business in a business savings acount, set aside for possible future expenditure as yet undefined. This was included in the opening balance of the accounts we have set up on the 'assets' side, but I assume needs to be shown in equity for the balancing account to be zero. Is there a way to do this?


Posted by Yvonne Barker on May 6, 2011 2:55 PM BST

Hello Yvonne,

In that case increase the balance of the 'Retained Earnings' account by the amount of the earned income.

Regards,


Posted by Mark McLaren (Solar Accounts) on May 6, 2011 3:56 PM BST