Undestributed profits (uncovered loss) - the final financial result of the company's activities for the reporting year, one of the components of liabilities, i.e. sources of funds of the company included in the section "Capital and reserves" of the Balance.
Retained earnings is the company's profit for the reporting year, less income tax, dividends, penalties for violation tax legislation and other expenses at the expense of profit (clause 83 of the Regulations on Accounting and financial statements in Russian Federation, approved Order of the Ministry of Finance of the Russian Federation of July 29, 1998 N 34n).
Uncovered loss is the company's loss for the reporting year, not covered by the relevant sources.
Also, the net profit indicator decreases when:
Increase in authorized capital at the expense of retained earnings;
Direction of retained earnings to the reserve fund.
Use of retained earnings for expenses, for example, as a source capital investments, is reflected only in analytical accounting by reserving the appropriate amount on a special subaccount (subaccount) of the account, for example:
Subaccount (subconto) "Retained earnings (uncovered loss)"
Subaccount (subconto) "Use of retained earnings as a source of capital investments."
The increase in the balance of uncovered loss, reflected in the debit of the account, occurs due to the reflection of the loss of the reporting year, which is debited to account from account 99 “Profit and Loss” with the closing turnovers of December of the reporting year
The uncovered loss ratio increases the correction in reporting period significant mistakes of previous years committed by companies that are not small businesses, which led to an underestimation of expenses in the period when the errors were made (clause 1, clause 9, clause 14 of PBU 22/2010).
Repayment of uncovered loss from the relevant sources is reflected in the credit of account 84 "Retained earnings (uncovered loss)" in correspondence with the accounts:
Retained earnings (uncovered loss): details for an accountant
Issued 26,597 Liabilities Kt Retained earnings at the beginning of the reporting period 47 ... construction 5,495 Liabilities Kt Retained earnings at the beginning of the reporting period 5 ... reclamation) 133,429 Liabilities Kt Retained earnings at the beginning of the reporting period 480 ...
Clients 4,881,994 Kt Retained earnings as of 01/01/2019 (as of... before) - 4,881,994 Dt Retained earnings as of 01/01/2019 (as of... . from clients 313,360 Kt Retained earnings as of 01.01.2019 (until... and earlier) - 313,360 Dt Retained earnings as of 01.01.2019 (as per... effect of previous periods on incoming retained earnings as of 01.01.2018 ...
Share capital 10,000 1,000 Retained earnings 37,000 6,500 Liabilities 6,000 ... investment disposals 975 60002 ... 12.2018 38,260 1 Retained earnings of the parent company as of... acquisition of control, then on the consolidated retained earnings of the "M + D" group it is ... capital 10,0007 10,000 Retained earnings and other reserves Calculation...
99 (profit and loss) 84 (retained earnings) 404,366,857 Net income... 99 (profit and loss) 84 (retained earnings) 43,776,000 Net income... 99 (profit and loss) 84 (retained earnings) 9 000,000 Net profit... 99 (profit and loss) 84 (retained earnings) 404,042,857 Net profit... 99 (profit and loss) 84 (retained earnings) 404,366,857 Net profit...
At the beginning of March 2018 Russian citizens overtook the second wave of capital amnesty. How effective it will be, only time will tell. However, the first stage of the amnesty in 2016, according to the head of the Ministry of Finance of the Russian Federation Anton Siluanov, "did not give the expected results that were expected." According to media reports, within the framework of the first wave of capital amnesty, only 7,200 special declarations were filed, and less than $100 million were declared, with an annual capital outflow of $25-30 billion. That is, a drop in the ocean on a scale ...
... ; 50% + 3891 × 100%) Liabilities Retained earnings (in terms of expenses on illiquid assets... ; 100% + 3891 × 100%) Liabilities Retained earnings (in terms of expenses on illiquid assets... 147,804 – illiquid 0 Liabilities Retained earnings ( in terms of other expenses for ...
Or loss) is reflected in account 99 “Profit and Loss”.
On December 31 of each year, when the balance sheet is reformed, the amount of net profit (loss) received is written off from account 99 “Profit and Loss” to the account 84 "Retained earnings (uncovered loss)"- active-passive.
Opening balance (debit) - the amount of uncovered losses of previous years at the beginning of the period.
The accountant of the organization made the following accounting entries:
Dt 84 Kt 75-2 300 000 rub. - dividends were accrued to an individual;
Dt 84 Kt 75-2 700 000 rub. - accrued dividends of the organization;
Dt 75-2 Kt 68 RUB 90,000 - personal income tax was charged (at the rate of 30%);
Dt 75-2 Kt 68 RUB 63,000 - Income tax was charged on dividends of a Russian company (at a rate of 9%);
Dt 75-2 Kt 51 210 000 rub. - dividends paid to an individual;
Dt 75-2 Kt RUB 51,637,000 - paid dividends to the organization.
The register of synthetic accounting on account 84 “Retained earnings (uncovered loss)” is journal-order No. 15.
Analytical accounting on account 84 is carried out in the areas of use of retained earnings (write-off of uncovered loss).
When used by an organization automated form accounting using the software product "1C: Enterprise" registers synthetic accounting are the turnovers of account 84 (General Ledger), the analysis of account 84, turnover balance sheet etc. The registers of analytical accounting are the balance sheet for account 84, analysis of account 84 for subconto, turnover between subconto, account card 84, account card 84 for subconto, etc.
| Content of operations | Debit | Credit |
|---|---|---|
| Written off the remaining unused profit of the reporting year | 99 | 84-1 |
| Written off the loss of the reporting year | 84-1 | 99 |
| Retained earnings of the reporting year are translated into retained earnings of previous years | 84-1 | 84-2 |
| The uncovered loss of the reporting year is transferred to the uncovered loss of previous years | 84-2 | 84-1 |
| Accrued income (dividends) from participation in the capital of the organization to founders who are on the staff of the organization | 84 | 70 |
| Accrued income (dividends) at the expense of net profit to founders who are not on the staff of the organization | 84 | 75-2 |
| Part of the net profit is used to replenish the reserve capital | 84 | 82 |
| Net profit is used to pay off losses of previous years | 84-1 | 84-2 |
| Net profit is used to replenish the authorized capital | 84 75-1 | 75-1 80 |
| A decrease in the authorized capital is reflected in order to bring it in line with the size net assets organizations | 80 | 84 |
| Reflected repayment of loss at the expense of reserve capital | 82 | 84 |
| Target contributions of the organization's participants were directed to pay off the loss | 75 (70) | 84 |
Definition 1
The final financial result of the organization's activities as of reporting date, reduced by the amount of accrued income tax payments, is called net or retained earnings(uncovered loss).
The result of the activity of the enterprise can be:
Upon receipt of a positive result, the enterprise will form retained earnings. In case of a negative result - uncovered loss.
Summarizing information on the presence, movement of retained earnings, as well as uncovered loss, active-passive account 84 “Retained earnings (uncovered loss)” is used.
Funds recorded on account 84:
The amount of net profit is determined at the end of the year on account 99 “Profit and Loss” and is debited by the final turnover of December of the reporting year to the credit of account 84, and the amount of net loss is debited to account 84.
The distribution of profits is carried out on the basis of a decision of the general meeting of shareholders in joint stock company or meetings of members in a limited liability company. Distribution subdivides its use into a number of purposes.
Profit distribution goals:
Dt 99 - Kt 84 - such a posting reflects the write-off of net profit in the reporting period. This will be the final posting on the turnover of December.
The distribution of profits occurs by decision of the meeting of shareholders or participants. Net profit is used to pay dividends, create or replenish reserve capital, and cover losses of previous years.
Dt 84 - Kt 70 - reflection of the amount of accrued income to the founders (employees of the enterprise) Dt 84 - Kt 75 - reflection of the amount of accrued income to the founders (outside participants) Dt 84 - Kt 82 - deductions to reserve capital are reflected. Dt 84 - Kt 84 - such a posting reflects the direction of net profit to cover the loss of the previous year. Dt 84 - Kt 99 - the amount of writing off the net loss, the final turnovers of December.
Losses of the reporting year from the credit of account 84 “retained earnings (uncovered loss) to the debit of accounts:
Remark 1
New plan accounts does not provide for the opening of sub-accounts on account 84 for various funds: accumulation, social, consumption. Analytical accounting for this account ensures the formation of information - directions for the use of funds. Retained earnings funds aimed at ensuring production development, but not yet used in analytical accounting, are separated.
The owners of the enterprise can spend the net profit for other purposes. Such goals include encouraging employees, charitable purposes, financing social events, holding cultural and sports events, etc. The instructions for using the Chart of Accounts do not provide for the reflection of expenses of enterprises on account 84 “Retained earnings (uncovered loss)” (letters dated 19.12 .2008 No. 07‑05‑06/260, dated 06/19/2008 No. 07‑05‑06/138). The Ministry of Finance recommends reflecting such expenses as other expenses on the basis of clause 11 of PBU 10/99 “Organization's expenses”. Cost allocation non-production purpose on expenses or profits is not only a matter of accounting, but of civil law.
Since the Chart of Accounts does not provide for debit transactions on account 84, and the owners cannot meet for each expense transaction, special-purpose funds are created from profits. The chart of accounts does not allocate a separate balance sheet account for accounting for funds formed on the initiative of the enterprise. Therefore, you can use either account 84 “Retained earnings (uncovered loss)”, or account 76 “Settlements with other debtors and creditors”. When accounting for special purpose funds on account 84 “Retained earnings (uncovered loss)”, a contradiction again arises with the explanations of the Ministry of Finance. According to the author, although special-purpose funds are intended for use, they are not obligations to creditors in the classical sense of the word. Therefore, the unspent balance of these funds is fair to take into account on account 84 as part of equity. If we rely on the opinion expressed by the Ministry of Finance, then it is more legitimate to use account 76 “Settlements with other debtors and creditors”, which has practically no restrictions on correspondence with other accounts. But in any case, account 91-2 “Other expenses” is not used to account for expenses from profit.
Account 84 of accounting is an active-passive account “Retained earnings (uncovered loss)”, refers to section Ⅶ “Capital” of the chart of accounts accounting and usually makes up a significant part of the capital of the organization. With standard wiring and practical examples consider the specifics of using account 84 and the features of reflecting operations with retained earnings.
Undestributed profits- this is the net profit after taxation at the end of the reporting year, received by the organization, but not yet distributed among shareholders in the form of dividends, to replenish capital or to cover uncovered losses.
Account 84 accounting serves for accounting financial result activities of the enterprise for the entire period of its operation, from the moment of registration to liquidation. The account is replenished during the reformation of the balance, that is, at the end of the reporting year.
Only the owners of the enterprise can dispose of the accumulated profit. The decision on the distribution of income or loss is made by its owners, drawn up by the minutes following the results of the general meeting of shareholders or participants.
Account 84 of accounting is active-passive, therefore, the uncovered loss is reflected in the debit, and the amount of net profit - in the credit of the account.
Sub-accounts of account 84 of accounting, which are active-passive, are shown in the figure below:
The allocation of funds to special funds, for example, dividends on preferred shares, corporatization, material incentives for employees, and their spending can be reflected in additional sub-accounts of 84 accounts, but they must be taken into account in the balance sheet in the amount of reserve capital.
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Correspondence of accounts and main entries on account 84 "Retained earnings (uncovered loss)" are presented in the table:
| Dt | CT | Wiring Description |
| 99 | 84.01 | Reflection of the amount of net profit based on the final turnover for the reporting year (December) |
| 84.01 | 75.02/70 | Reflection of the payment of dividends (as of the date of the decision) |
| 84.01 | 82/80 | Net profit allocated to reserve capital / authorized capital |
| 80 | 84 | Reflection of the decrease in the authorized capital to the amount of net assets (as of the date of state registration) |
| 84.02 | 99 | Reflection of the amount of loss based on the final turnover for the reporting year (December) |
| 99 | 84.03 | Reflection total amount retained earnings among shareholders |
| 82/75/80 | 84.02 | Reflection of loss coverage at the expense of reserve capital (as of the date of the decision) / own funds of the founders / authorized capital (after state registration of these changes) |
| 84.03 | 84.02 | Covering the loss with the accumulated amount of retained earnings |
| 84.03 | 84.04 | Reflection of the fact of using retained earnings when creating property |
At the end of 2016, Merod JSC received a net profit of 175,300 rubles. On the general meeting shareholders, it was decided to distribute it for the payment of dividends (70%) and replenishment reserve fund (10%).
Posting table for account 84 - payment of dividends:
As of January 2017, Fenkh LLC has a reserve capital in the amount of 70,000 rubles, and the loss at the end of 2016 amounted to 130,000 rubles. At the general meeting of the participants of the company, it was decided to cover the loss partly with the funds of the reserve capital, partly - at the expense of own funds in proportion to the share of participants in the authorized capital:
Posting table for account 84 - Loss coverage at the expense of own funds and reserve capital:
| Dt | CT | Amount, rub. | Wiring Description | A document base |
| 84.02 | 99 | 130 000 | Reflection of uncovered loss | Income statement |
| 82 | 84.02 | 50 000 | Repayment of part of the loss at the expense of reserve capital | Minutes of the general meeting |
| 75.01 | 84 | 60 000 | Reflection of debt Ottis E.A. | Accounting information |
| 75.01 | 84 | 20 000 | Reflection of debt Koreva A.I. | |
| 51 | 75 | 80 000 | Reflection of loss coverage by owners' contributions | Payment order |
Undistributed profit (loss) of the reporting year is important indicator, indicating the productivity of the company. Undistributed is considered the part of the profit that remains under the control of the company after making payments and has not yet been directed either to the development of capacities or to the payment of dividends. The distribution of profits is the prerogative of the owners of the company, and this happens on the basis of the minutes of the meeting of shareholders, where the corresponding decision is recorded. We will learn how accounting for retained earnings (NP) is carried out.
There is an opinion that retained earnings are net income. This is true if the company did not accrue in reporting year dividends and has no deferred tax liability. Differences between unallocated (AR) and net profit(NP) only in coverage: NP - the result of the enterprise's work for the entire period of the company's existence and the reporting year, NP - the result of the company's activities in the current period. Often it is net income that acts as retained earnings.
When calculating the amount of retained earnings (uncovered loss), they operate on the values of its presence at the beginning of the year, the PE (or loss) for the year and the amounts of dividends paid to owners. For JSCs, these are payments to shareholders, for LLCs - to the founders.
Depending on the final result of the company's activities, the calculation formula is slightly modified:
To combine information about the actual presence and dynamics of the amounts of retained earnings or uncovered loss, there is an account of the same name 84.
The NP calculation mechanism is activated at the end of the year when the balance sheet is reformed, i.e. closing of scores 90 and 91 at the end fiscal year when preparing reports. Closing account 90, the accountant transfers the balance to account 99 “Profit and Loss”, displaying the results from the sale of products or services provided:
Operations related to non-sales are reflected in the account of other costs and income - 91. At the end of the year, the accountant closes the 91st account, transferring the balance to the 99th:
The balances of other accounts are also transferred to the 99th account, forming the results of the work for the year. In the future, the accountant writes off the final balance of the 99th account on the 84th, reflecting the entries:
To fix the amount of profit for the current period, the company can create sub-accounts to the account. 84. For example, take into account the profit in the current period on the account. 84/1, NP reflect on the account. 84/2, and the use of profits - on account. 84/3. The profit of the reporting year within the account will be reflected in the entry D / t 84/1 - K / t 84/2, and postings using the account. 84/3 - fix the distribution of profits for different purposes.
After accounts 90, 91, 99 are closed, completely reset to zero, they will begin to be used again only next year. Before reflecting the amount of NP in the reporting, it is reduced by the amount of income tax (D / t 99 - K / t 68).
Reflection of the value of NP on the loan c. 84 achieves the determination of the amount of accumulated profit at the end of the reporting period. Its use is documented by the minutes of the meeting of owners, and it can be directed to various needs. For example:
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Operation |
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Payment of income to the owners of the company after the approval of the annual financial reporting |
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Personnel bonuses |
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Part of retained earnings is directed to: |
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To increase the size of the authorized capital |
80 (for AO) 75 (for LLC) |
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To replenish the reserve capital |
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For additional capital gain |
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To pay off established losses of past periods |
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For investment |
Analytical accounting for accounts. 84 is usually organized in such a way as to inform the user as much as possible in the directions of using the funds. Guided by the convenience in reflecting the use of profits, they separately group funds already aimed at ensuring the development of the company or acquiring assets and not yet used.
To fix the loss made in the reporting year, a separate sub-account can be created - 84/4. If its value is not covered by the profit of previous periods, then the founders of the company make a decision to repay it by other sources, or leave it in the balance sheet. In this case, it becomes uncovered and is entered with a minus value in line 1370 of the balance sheet.
Various funds and reserves serve as sources for covering losses. The wires can be:
When analyzing NP, it is necessary to evaluate the change in its share in the amount of equity capital. A decrease in retained earnings indicates a decrease in the company's business activity. However, before drawing such conclusions, it is necessary to examine the structure of equity capital and take into account the fact that the amount of NP in many respects is determined by the adopted accounting policy firms. In addition, a decrease in NP is often preceded by the identification of errors that led to an overestimation of income, and, accordingly, a decrease in NP.
But if retained earnings increased, this indicates:
The most acceptable for investors is a company that invests the funds remaining after the payment of dividends in its own development.
