How to make up the accounting entries for the losses of the enterprise in the previous year

To make up for the losses of previous years, there is no need to make special entries, and only the net profit after tax for the current year needs to be directly transferred to the "profit distribution".

Undistributed profits.

Subjects are fine. After the transfer-in, the debit balance of the "Profit Distribution – Undistributed Profit" account is the uncovered loss. If, after the transfer, the account is a credit balance, it is the retained earnings after the loss is covered.

The so-called making up for the loss of the previous year refers to the net profit of the previous year in terms of accounting treatment.

If the net profit is negative (or the sum of the net profit of previous years is negative), the net profit after tax of the current year must first make up for this part of the loss before it can be used as the net profit available for distribution to accrue provident fund, community chest or dividends.

According to the relevant provisions of the regulations for the implementation of the enterprise income tax law, the losses incurred by an enterprise can be carried forward to subsequent years, or they can be made up by the income of subsequent years. So how do enterprises make up for the accounting entries of previous years' losses? Let's learn more about it.

Accounting entries to make up for losses in previous years:1. Make up for losses with after-tax profits.

Borrow: Profit for the current year.

Credit: Profit distribution - undistributed profits.

2. Use surplus reserves to make up for losses.

Borrow: surplus reserve.

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

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.

Use pre-tax profits to make up for losses: The tax law stipulates that when an enterprise incurs an annual loss, it can use the income of the following year to pay taxes, and if the annual income of the following year is insufficient to make up for the loss, it can continue to make up for it year by year, but the maximum period of continuous compensation shall not exceed 5 years. At the same time, it is not necessary to make accounting entries to make up for the losses of previous years with pre-tax profits.

To make up for the losses of previous years, explained AshiyuTo make up for the losses of previous years, it is an accounting term, from the "Regulations for the Implementation of the Enterprise Income Tax Law", which means that in terms of accounting treatment, if the net profit of the previous year is negative (or the total number of net profits of previous years is negative), the pre-tax profit of the current year must first make up for this part of the loss, before it can be used as the net profit available for distribution, to accrue provident fund, community chest or dividends.

The so-called making up for the loss of the previous year means that in terms of accounting treatment, if the net profit of the previous year is negative (or the sum of the net profits of the previous years is negative), the net profit before tax of the current year must first make up for this part of the loss, before it can be used as the net profit available for distribution, to accrue provident fund, community chest or dividends.

The above content is referenced from Encyclopedia - Make up for losses in previous years.

There are three main ways for businesses to make up for their losses:

1. If the enterprise incurs losses, it can be made up with the pre-tax profit of the next year, and if the profit of the next year is insufficient to make up for it, it can continue to make up for it within 5 years.

2. If the pre-tax profit of the enterprise is insufficient or the loss is made up within 5 years, the after-tax profit shall be used to make up for the loss. Deferred income tax is not recognized in this way. Under the tax law, the balance of the loss cannot be deducted when calculating the taxable income.

3. The losses incurred by the enterprise can be made up by surplus reserves. The Surplus Reserve account is debited and the Profit Distribution - Surplus Reserve Deficit account is credited.

Summary. In the process of production and operation, profits may occur and losses may occur. When there is a loss at the end of the year, the corresponding accounting entries are: debit: profit distribution - undistributed profit, credit: current year's profit.

How to make accounting entries for corporate losses.

At the end of the year, the credit balance of each account in the profit and loss account should be transferred to the credit side of the "profit of the year", and the debit balance of each account in the profit and loss account should be transferred to the debit side of the "profit of the year". If the credit transferred is less than the debit, and the balance is on the debit side, it means that the enterprise is losing money this year, and it should also carry forward the profit of the year at the end of the year to the "profit distribution" account.

If the company loses money at the end of the year, what should be done with the accounting entries?

In the process of production and operation of enterprises, profits may be wiped out, and losses may also occur. When there is a loss at the end of the year, the corresponding accounting entries are: Debit:

Profit distribution - undistributed profit, credit: profit for the current year. At the end of the year, the credit balance of each account in the profit and loss account should be transferred to the credit side of the "profit of the year", and the debit balance of each account in the profit and loss account should be transferred to the debit side of the "profit of the year". If the credit transferred is smaller than the debit, and the balance is on the debit, it means that the enterprise is losing money this year, and it is also necessary to carry forward the profit of the year at the end of the year.

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After-tax profits are automatically made up for losses in previous years and do not need to be entries. As long as the current year's profit is transferred to the undistributed profit normally.

Borrow: Profit for the current year.

Credit: Profit distribution - undistributed profits.

The profit for the year is a summary account. The income realized by the credit registered enterprise in the current period includes main business income, other business income, sideline investment income, "subsidy income", non-operating income, etc.

The expenses and expenses incurred by the debit-registered enterprise in the current period include the cost of main business, taxes and surcharges on the main business, other business expenses, operating expenses, management expenses, financial expenses, investment income (net loss), non-operating expenses, income tax, etc.

At the end of the year, if the profit is made, the credit balance of "Profit of the Year" will be transferred to the account of "Profit Distribution Undistributed Profit" to make up for the loss of the previous year.

According to the relevant provisions of the regulations for the implementation of the enterprise income tax law, the losses incurred by the enterprise can be carried forward to the following years, or the income of the following years can be used to make up for it. So how do enterprises make accounting entries to make up for losses in previous years?

Since the after-tax profit is automatically covered by the loss of the previous year, there is no need to make entries. As long as the current year's profit is transferred to the undistributed profit normally.

Borrow: Profit for the current year.

Credit: Profit distribution - undistributed profits.

What are the main ways for companies to make up for their losses?

There are three main ways for enterprises to make up for losses:

1. If an enterprise incurs a loss, it can be made up with the pre-tax profit of the next year, and if the profit of the next year is insufficient to make up for it, it can continue to make up for it within 5 years.

2. When the enterprise incurs a loss and the pre-tax profit within 5 years is insufficient to make up for it, it can be made up for by the after-tax profit.

3. The losses incurred by the enterprise can be made up by the surplus provident fund.

Loss refers to the amount of the total income of the enterprise in each tax year less than zero after deducting the non-taxable income, tax-exempt income and various deductions in accordance with the provisions of the Enterprise Income Tax Law of the People's Republic of China and its implementing regulations.

How to adjust the company's year-end profit to make up for the loss of the previous year?

Can the loss outside the shed be covered by the profit in the house?

According to Article 17 of the Enterprise Income Tax Law of the People's Republic of China, when an enterprise calculates and pays enterprise income tax in aggregate, the losses of its overseas business establishments shall not be offset against the profits of its domestic business establishments.

According to the Notice of the Ministry of Finance and the State Administration of Taxation on Issues Concerning the Credit of Overseas Income Tax of Enterprises (CS 2009 No. 125), when calculating the overseas taxable income in the aggregate, if an enterprise establishes a branch in the same country (region) abroad without independent tax status, the loss calculated in accordance with the relevant provisions of the Enterprise Income Tax Law and the implementation regulations shall not be deducted from the taxable income in its territory or in other countries (regions). However, it can be made up according to regulations with the income from other projects in the same country (region) or in the following years.

Summary: Overseas losses shall not be deducted from domestic profits, but overseas income may make up for domestic losses.