How to do the profit and loss adjustment account for the previous year

1. The "Profit and Loss Adjustment for Previous Years" account should be carried forward to the "Profit Distribution - Undistributed Profit" account.

1. When the profit or loss of the previous year is adjusted to a credit balance, the accounting entries are:

Debit: Profit and loss adjustments for prior years.

Credit: Profit Distribution – Undistributed Profits.

2. When the profit and loss of the previous year is adjusted to a debit balance, the accounting entries are:

Debit: Profit distribution - undistributed profits.

Credit: Prior Year Profit and Loss Adjustment.

The profit and loss adjustment account of the previous year refers to the adjustment of the profit and loss of the previous year that occurs in the current year of the enterprise, as well as the correction of important errors in the previous period found in the current year, and the account that involves the adjustment of the profit and loss of the previous year.

Events that need to adjust the profit or loss of the reporting year that occur between the balance sheet date and the date of approval of the financial report can also be accounted for through this account.

1) If the enterprise adjusts to increase the profit of the previous year or reduce the loss of the previous year, the relevant account shall be debited and the account shall be credited; Adjust the accounting entries that reduce the profit of the previous year or increase the loss of the previous year to make the opposite.

2) The income tax expense increased due to the adjustment of profit and loss in previous years shall be debited to this account and credited to the account of "tax payable - income tax payable"; Negative accounting entries are made for income tax expenses that are reduced due to profit or loss adjustments for prior years.

3) After the above adjustments, the balance of this section shall be transferred to the account "Profit Distribution - Undistributed Profits". If this account is a credit balance, this account is debited and the "Profit Distribution - Undistributed Profit" account is credited; For example, make the opposite accounting entry for the debit balance.

Principles for the treatment of adjustments after the balance sheet date.

Accounting for adjustments after the balance sheet date.

How to do profit and loss adjustment entries for previous years.

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Pay attention to how to do the profit and loss adjustment subjects in the previous year of the Global Online School.

Profit distribution - undistributed profit.

The role of the "profit and loss adjustment" account of the previous year was originally to adjust the profit of the previous year, which is the beginning of the year of the "profit distribution". Or with software? If you use software, as far as I know, the speed software can not reflect the "previous year's profit and loss" account, which will cause an imbalance in the automatically exported statements, and if you do it manually, this problem will not occur.

The net profit in the income statement should be consistent with the balance of the "Profit for the Year" account.

This is because when you make the profit and loss adjustment entries for previous years, there is no account for the profit of the current year, and the data in the income statement is based on your business income, costs and related expenses for the current year, and has nothing to do with the adjustment of the previous year's events. However, it will not match the "undistributed profit" in the owner's equity in the lower right corner of your balance sheet, because the "undistributed profit" in the owner's equity includes the two accounts of "current year's profit" and "undistributed profit" for the current year.

This should be an owner's equity account. This account is generally used to adjust the expenses and costs incurred in previous years or other accounts to include the wrong amount, which affects the taxable income of the enterprise. Through this account, the purpose of adjusting the taxable income of the current year is achieved.

If the adjustment does not affect the taxable income of the current year, then the adjustment of the undistributed profit account can be allocated in green. This does not affect the taxable income of the current year.

The prior year's profit and loss adjustment account is used to account for the adjustment of the profit and loss of the previous year.

For example, if the income is recorded less in the previous year, the current adjustment entries are: debit: accounts receivable and other accounts, credit: profit and loss adjustment of previous years - main business income, tax payable - value-added tax payable.

The "Profit and Loss Adjustment for Previous Years" account for the adjustment of the previous year's events in the current year, including the profit and loss of the reporting year that needs to be adjusted between the annual balance sheet and the approval of the financial report for export, as well as the material accounting errors of the previous year that occurred in the current year. Under the new accounting system, this account is a profit and loss account.

The new accounting system stipulates that if an enterprise adjusts to increase (or decrease) the profit of the previous year or adjusts to reduce (or increase) the loss of the previous year, it debits (or credits the relevant account, and credits (or debits) the account of "profit and loss adjustment of the previous year"; The income tax of the enterprise due to the adjustment of the increase (or decrease) of the profit (or loss) of the previous year shall be debited (or credited) to the account of "Adjustment of profit and loss of previous years" and the account of "Tax Payable - Income Tax Payable"; After the adjustment, at the same time, the balance of the "Profit and Loss Adjustment of Previous Years" account will be transferred to the account of "Profit Distribution - Undistributed Profit", and after the carryover, there will be no balance in the "Profit and Loss Adjustment of Previous Years" account; In the income statement, the "Profit and loss adjustment for previous years" item is removed.

It can be seen that the "adjustment of profit and loss of previous years" affects the profit distributed at the beginning and end of the period, and does not affect the profit or loss of the current period, nor is it reflected in the income statement. The account should no longer be a profit and loss account. In fact, it adjusts the "Profit Distribution - Undistributed Profits" account, which should be an owner's equity account in nature.

Accounting treatment of adjustments after the balance sheet date shall be the same as the events that occur during the period to which the balance sheet belongs, and the accounting statements prepared at the balance sheet date shall be adjusted accordingly, where the accounting statements include the balance sheet, the income statement and its related schedules and the notes to the cash flow statement. Since the events after the balance sheet date occurred in the following year, the relevant accounts of the previous year have been carried forward, especially the profit and loss accounts have no balance after the closing of the accounts. Therefore, the adjustments that occur after the balance sheet date should be accounted for separately as follows:

1.Matters involving profit and loss are accounted for through the "Profit and Loss Adjustment for Previous Years" account. Adjustments to increase prior years' income or adjust to reduce prior years' losses, as well as the income tax from the reduction thereof, are credited to the "Adjustment of prior years' gains and losses"; Adjustments to decrease prior years' gains or adjustments to increase prior years' losses, as well as adjustments to increase income taxes, are debited to the "Prior Year Profit and Loss Adjustments" account.

The credit or debit balance of the "Profit and Loss Adjustment" account for the previous year, transferred in.

Profit Distribution - Undistributed Profit account.

2.Matters involving the adjustment of profit distribution are directly accounted for in the account "Profit Distribution - Undistributed Profits".

3.For matters that do not involve profit and loss and profit distribution, the relevant accounts are adjusted.

1) Figures of the relevant items of the accounting statements prepared at the balance sheet date;

2) The beginning of the year of the relevant items of the accounting statements prepared in the current period.

Borrow: Profit or loss on property to be disposed of.

Credit: Prior Year Profit and Loss Adjustment.

Debit: Profit and loss adjustments for prior years.

Credit: Tax Payable - Corporate Income Tax.

Debit: Profit and loss adjustments for prior years.

Credit: Profit Distribution – Undistributed Profits.

1. If the amount of overpaid expenses is small, it is a non-material accounting error, and the accounting entries for this year can be directly adjusted.

2. If the amount is large, it should be included in the profit and loss adjustment account of the previous year.

Borrow: Welfare expenses payable.

Withholding Expenses. Credit: Prior Year Profit and Loss Adjustment.

Adjustment of income tax payable.

Debit: Profit and loss adjustments for prior years.

Credit: Tax Payable - Income Tax Payable.

Transfer the profit and loss balance of the previous year to the profit distribution.

Debit: Profit and loss adjustments for prior years.

Credit: Profit Distribution – Undistributed Profits.

Adjust the figures related to profit distribution.

Borrow: surplus reserve.

Credit: Profit Distribution – Undistributed Profits.

3. Adjust the statement (if you adjust the account in June, adjust the beginning of the year of the June statement) to adjust the beginning of this year's statement, in the asset negative debt table, the amount of welfare expenses payable and withholding expenses will decrease, the amount of tax payable will increase, the amount of surplus reserve account will increase carefully, and the amount of profit distribution account will increase. In the income statement, if the monthly report only has the number of this month and the number of the previous month, and does not involve the amount of the previous year, in the annual report in December, the number of the previous year will be adjusted, the amount of the corresponding cost and expense account will be reduced, the amount of income tax will be increased, and the amount of statutory surplus reserve and statutory community chest will be withdrawn.