Why doesn t the use of surplus reserves to cover losses cause a change in owners equity?

1. The reason why the surplus reserve does not cause changes in the owner's equity is that the surplus reserve account and the profit distribution account belong to the owner's equity category, which is the change between various items within the owner's equity and does not affect the total owner's equity.

2. The specific accounting entries for using surplus reserves to cover losses are:

1. When an enterprise uses surplus reserves to make up for losses:

Borrow: surplus reserve.

Credit: Profit Distribution - Surplus Reserve to Make Up for Deficit.

2. When carrying forward the surplus reserve at the end of the year to make up for the loss:

Borrow: Profit distribution - surplus reserve to make up for losses.

Credit: Profit Distribution – Undistributed Profits.

Third, the surplus reserve is the accumulation of the previous net profit, the purpose of enterprise accumulation is to cope with future difficulties and crises, so the surplus reserve is mainly used to make up for losses, dividends and increase capital, when the surplus reserve to make up for the loss, the surplus reserve will be reduced, and the unmade loss will be reduced.

Surplus reserve. Both the account and the profit distribution account are part of the owner's equity.

It is the change between the items within the owner's equity, so the use of surplus reserve to make up for the loss does not affect the total amount of the owner's equity.

Accounting treatment of surplus reserve deficit:

1. Generally, the pre-tax profit of the following year is used to make up for it, and if it has not been made up for 5 consecutive years, it can only be made up with after-tax profit after 5 years.

2. If there is still a loss in the following years, or even if the profit is still not made up, the surplus reserve can be considered to make up for the loss; The surplus reserve is the net profit that was previously made.

The purpose of enterprise accumulation is to cope with future difficulties and crises, so the surplus reserve is mainly used to make up for losses, distribute dividends and increase capital.

When the surplus reserve covers the loss, the surplus reserve decreases and the uncovered loss decreases.

3. When the surplus reserve is used to make up for the loss, the accounting entries.

1.When an enterprise uses surplus reserves to make up for losses:

Borrow: surplus reserve.

Credit: Profit Distribution - Surplus Reserve to Make Up for Deficit.

2.When the surplus reserve is carried forward at the end of the year to make up for the loss:

Borrow: Profit distribution - surplus reserve to make up for losses.

Credit: Profit Distribution – Undistributed Profits.

Surplus reserve to make up for deficit.

Borrow: surplus reserve.

Credit: Profit Distribution - Surplus Reserve to Make Up for Deficit.

It is the increase or decrease between the owner's equity and the internal one.

There will be no change in owner's equity.

The surplus reserve also belongs to the owner's equity.

Borrow: Surplus Reserve - Surplus Reserve covers losses.

Borrow; Profit distribution - undistributed profit.

One increases and one decreases, so there is no change in the owner's equity.

Will the surplus reserve make up for the loss cause a change in the owner's equity is introduced as follows:

Changes in surplus reserves do not necessarily affect changes in total owners' equity. For example, the surplus reserve of sales envy makes up for the loss. Borrow: Surplus Reserve Loan: Profit Distribution - Undistributed It belongs to the owner's brother bureau within one increase and one decrease. Therefore, there is no impact on the total amount.

If it is due to external reasons, such as a change in the measurement model of investment real estate, the cost model is changed to a fair value measurement. Then a 10% change in the difference will lead to a change in the owner's equity.

The reason why the surplus reserve does not cause changes in the owner's equity is that the surplus reserve account and the profit distribution account both belong to the owner's equity category, which is the change between various items within the owner's equity and does not affect the total owner's equity.

The specific accounting entries for covering losses with surplus reserves are:

1. When an enterprise uses surplus reserves to make up for losses:

Borrow: surplus reserve, credit: profit distribution - surplus reserve to make up for losses.

2. When carrying forward the surplus reserve at the end of the year to make up for the loss:

Borrow: Profit distribution - surplus reserve to make up for losses.

Credit: Profit Distribution – Undistributed Profits.

Changes in surplus reserves do not necessarily affect changes in total owners' equity. For example, the surplus reserve makes up for the loss.

Debit: surplus reserve, credit: profit book This distribution - undistributed profits, which belong to the owner of the internal increase and decrease. Therefore, there is no impact on the total amount.

The reason why the surplus reserve does not cause changes in the owner's equity is that the surplus reserve account and the profit distribution account belong to the owner's equity category, which is the change between various items within the owner's equity and does not affect the total amount of the owner's equity.

The specific accounting entries for covering losses with surplus reserves are:

1. When an enterprise uses surplus reserves to make up for losses:

Borrow: surplus reserve, credit: profit distribution - surplus reserve to make up for losses.

2. When carrying forward the surplus reserve at the end of the year to make up for the loss:

Borrow: Profit distribution - surplus reserve to make up for losses, Credit: profit distribution - undivided and disorderly allocation of profits.

1. The surplus reserve does not affect the total amount of owners' equity;

2. Owner's equity refers to the residual equity enjoyed by the owner after deducting the liabilities from the assets of the enterprise.

3. Owners' equity includes: paid-in capital (share capital for listed companies), capital reserve, surplus reserve, and undistributed profits.

4. The accounting treatment of surplus reserve to make up for losses is: borrow: surplus reserve, credit: profit distribution - undistributed profits. From the entries, it can be seen that the surplus reserve is an internal change in the owner's equity, and the total owner's equity is unchanged. Bima.

Legal basisArticle 166 of the Company Law of the People's Republic of China.

The surplus provident fund can be used to cover losses. Therefore, if a resolution is made at the general meeting of shareholders or the board of directors of your company, you can use the surplus reserve to cover the loss.

Article 168.

When the statutory reserve fund is converted into capital, the reserve fund retained shall not be less than 25% of the registered capital of the company before the conversion.

Article 169.

The company's hiring or dismissal of the accounting firm that undertakes the company's audit business shall be decided by the shareholders' meeting, the general meeting of shareholders or the board of directors in accordance with the provisions of the company's articles of association.

When the shareholders' meeting, the general meeting of shareholders or the board of directors of a company votes on the dismissal of an accounting firm, the accounting firm shall be allowed to state its opinions.