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 « 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.
Account 1209 « Interim dividends » records interim dividends paid before the approval of the financial statements for the financial year in accordance with the conditions set out in Article L. 232-12 of the French Commercial Code. It is debited by crediting a subdivision of account 457 « Partners – Dividends payable ». Account 1209 is balanced during the following financial year after the partners have decided on the appropriation of profits.
