USA Posting Profit and Loss with a Journal Entry

[srzink]

I have a client that we post monthly their profit and loss via a journal entry. What account do you use for net income?

 

[DrStrangeLove]

I don't think net income is a postable account. Net income is part of the presentation of the income statement, but it's not an account per se. It falls out of the total of journal entries that affect income statement accounts.

I'm not entirely clear from your description what your journal entry looks like. Maybe I'm misunderstanding your question. Are you posting one summary journal entry that's a total of the client's journal entries affecting their income statement accounts?

 

[Shcoll]

I have a client that we post monthly their profit and loss via a journal entry. What account do you use for net income?

Debit Revenue Account
Credit Income Summary Account

Credit Expense account
Debit Income Summary Account

Depending on The Income Summary Account, if the expense side is less than the revenue side than the Income Summary is increase, the opposite will decrease the Income Summary Account.

 

[Accounting for Beginners]

At the end of the accounting fiscal year, you would close the temporary accounts (revenue, expenses, and dividends accounts), using closing entries. The balance goes into the retained earnings account (showing how retained earnings increased or decreased due to net income / net loss and dividend payments.