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ACCOUNTS
II. Functioning of accounts
Class 1. Equity and liabilities

12. Profit or loss for the financial year

 

Account 12 " Profit or loss for the financial year " records the balance of the expense accounts and the revenue accounts for the financial year.

A credit balance in account 12 represents a profit, as revenues exceed expenses.

A debit balance in account 12 represents a loss, as expenses exceed revenues.

Account 12 is balanced after the decision to allocate the profit or loss. In companies, amounts not distributed and not allocated to a reserve account are transferred to account 11 " Retained earnings ", to account 110 in the case of a profit brought forward, and to account 119 in the case of a loss brought forward, if these accounts are open. At the opening of the accounts for the following year, entities have the option of using a special account 88 " Profit and loss pending appropriation " . In sole proprietorships, the balance of account 12 is transferred to account 101 " Sole proprietor's capital " .

Entities may use account 120 " Profit for the financial year " to record the profit and account 129 " Loss for the financial year " to record the loss. They may use accounts 121 to 128 as they see fit, for example, to measure income statement performance indicators.

 

 
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