Retained earnings calculation during virtual close

During a virtual close, retained earnings are calculated as the sum of all income statement accounts for the given period.

Because the virtual close at the end of any user-defined period updates your retained earnings balance, the Close books function does not cause a retained earnings roll forward.

Nor does it zero out income and expense accounts for the period being closed. Therefore, you can report across any time period and see the revenue and expense balances based on the report setup—over time or within the retained earnings account.

Do not post directly to your retained earnings account. Instead, create a separate retained earnings adjustment account to use for manual retained earnings adjustment entries as needed. Categorize this adjustment account as retained earnings for reporting rollup.

The following table shows how retained earnings are calculated based on specific reporting periods.

How retained earnings are calculated for a given period
Reporting period What's calculated

Example based on a current date of Nov. 15, 2025
Current Month The beginning balance plus the sum of all income statement accounts from inception through the last complete month Jan. 1, 2025 - Oct. 31, 2025
Current Quarter The beginning balance plus the sum of all income statement accounts from inception through the last complete quarter Jan. 1, 2025 - Sept. 30, 2025
Current Year The beginning balance plus the sum of all income statement accounts from inception through the last complete year Jan. 1, 2024 - Dec. 31, 2024