Retain earnings

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Introduction: -Basically retained Earnings Account is used to carry forward the balance from one fiscal year to the next fiscal year. (Net profit/Net losses carry forward from P&L to retained earnings a/c). The retained earnings A/C need to be assigned to the P&L Statement account type.

In SAP Retained Earning Account will be assigned to Chart of Account. Within the chart of accounts, there will be a specific account designated for retained earnings.

Advantages:-

The retained earnings account in SAP serves as a vital tool for financial management, reporting, and decision-making, enabling companies to effectively track, manage, and utilize their retained earnings for sustainable growth and value creation.

Configuration steps:-

• Create one GL account for Retained Earning Account (FS00)
• Assign  GL to Retained Earning Account (OB53)

1. Create one GL account for Retained Earning Account (FS00)

2. Assign  GL to Retained Earning Account (OB53)

In this step SAP given 2 ways to define retain earnings. You can use direct Transaction code OB53 or go for below path.

SPRO-->IMG--> Financial Accounting --> General Ledger Accounting --> Master Data --> G/L Accounts --> Preparations --> Define Retained Earnings Account.

Conclusion: - If you do not use one of the standard charts of accounts, you must specify the P&L statement account type(s) and the retained earnings accounts for each new chart of accounts you set up. Make sure the accounts you specify are created.