Discuss the difference between the two methods of carrying forward profit and loss, and discuss their points of comparison.

Account closing method and table closing method

A. Introduction to account closing method and table closing method

In order to calculate the profit for the current period, two methods are usually used, the table closing method and the account closing method, some domestic financial systems use the account closing method, which seems to be more in line with the Chinese custom, the settlement of the profit and loss of the virtual account of the balance of the account is carried forward and summarized to the current year's profit account, and the final account is not a balance of the real balance of the asset and liability accounts should also be carried forward to the next period as its initial balance. The balance of the real account of assets and liabilities should also be carried forward to the next period as its initial balance. Foreign systems, on the other hand, use the so-called table closing method. Compare these two methods.

Second, the book-end method and the principles of the table-end method

The new accounting system provides that the enterprise's profit (loss) carried forward at the end of the period, you can use the method of the table-end profit or book-end profit method. There are similarities and differences between the book-end profit method and the table-end profit method in accounting.

1. The process of calculating profit is the same. Both methods are based on the calculation of the end of the total profit (or loss), through the profit and loss accounting account will be transferred to the balance of the "profit for the year" accounting account, with the method of profit and loss. The process of calculating profit is the same.

2, using the same accounting entries. Regardless of the use of table closing profit method and the use of account closing method, are used in the profit and loss category of all accounting entries and "profit for the year" account. Enterprise realized profits (losses), all through the "profit for the year" account for accounting. That is, at the end of the period, the balance of the profit and loss account will be transferred to the "profit for the year" account.

3, different connotations of the closing time. The two methods of profit and loss accounts of the settlement time, although they are stipulated in the "end of the period", but its connotation is different, the table ends the profit method of the "end of the period" means "the end of the year", while the profit of the accounts The meaning of "end of period" is "end of month".

4, accounting for profit accounting procedures are different. Table closing profit method, the monthly closing, profit and loss of the balance of each section does not need to be carried forward to the "profit for the year" account, only to the end of the year, and then use this method of profit and loss of each account of the cumulative balance of the whole year transferred to the "profit for the year" account. The "profit for the year" account is not normally used, but only at the end of the year. The profit method is commonly used by enterprises before the promulgation of the new accounting system, and it is the only method to calculate the profit carried forward. After the promulgation of the new accounting system, enterprises can choose one of the two methods. With this method, at the end of each month, the balance of each profit and loss account is transferred to the "profit for the year" account, and the profit (loss) for the month is calculated through the "profit for the year" account. Every month, you have to repeat the use of profit and loss accounts and "profit for the year" account for the calculation of profit and loss for the current period and carry forward.

5, the table closing profit and account closing profit two methods are relative, they are both different and related. Enterprises in the use of table profit method of profit accounting, its year-end profit and loss is actually the book-end profit method of accounting at its point in time specific application.

Three, the book-end method and table-end method comparison

(1) book-end method.

Each accounting period (i.e., at the end of the month) through the preparation of transfer vouchers will be transferred to the P& L account balance of profit and loss accounts, profit and loss accounts at the end of the month does not leave a balance of the balance sheet on the profit for the year account is filled in the actual balance of the account.

There are usually two parts to the preparation of closing entries and closing accounts, carry forward the balance of the income account.

1. Carry forward revenues

Dr:Revenues from various sales

Cr:Profit for the year

Sales returns

2. Carry forward expenses .

Dr:Profit for the year

Cr:Cost of goods sold

Operating, administrative and financial expenses for the period

Income tax expense and so on

*Note that the following month of the cost of the actual exact period should be the current period, and the majority of foreign companies use a variation of the accounting year does not use the month as the period. The actual business closing entries are much more troublesome. *

*No longer differentiate between accounts and accounts, please refer to the relevant financial books for the difference between the two. *

After the carry-over of the current year's profit for the month (period) that is, the current period's profit (or loss), the cumulative number of the current year is reflected in the cumulative profit (or loss) realized during the period, it is clear that the workload will be very large accounts closing method, of course, the use of computerized computer can be completed automatically without regard to the workload.

The year-end processing and month-end above the carry-over steps are basically the same, generally according to China's traditional accounting methods will then carry over the current year's profits to the retained earnings account.

(2) The table closing method.

Using this method of carry-forward, P & amp; L accounts in each transaction automatically accumulate the balance at the end of the month do not have to make any transfer entries, that is to say, do not have to do any settlement action, through the database form saved in the P & amp; L balances for the period and the preparation of the financial statements of the version of the automatic calculation of the profit for each period. At the end of the year only the cumulative balance of the P&L accounts throughout the year to the so-called retained earnings (retained earnings account, retained earnings, including undistributed profits and surplus reserves in two parts) account, but also did not generate entries, just Carryforward balance to the next year as the beginning of the year only.

In the foreign system of the table in the end of the method, in fact, P & amp; L and BS subjects incurred exactly the same way to deal with the cumulative amount of the direct record, just the end of the year when the BS balance carryfowd to the next year as the beginning of the year balance (the first column balance carryfowd of the Cumulative balance), and all P & amp; L balance balance carryfowd, and all the P & amp; L balance carryfowd to the beginning of the year as the number. amp;L balance carryfowd to the next year as the beginning balance (the first column balance carryfowd Cumulative balance), and all P&&L balance carryfowd to the retained earnings account.

The table closing method greatly reduces the workload of the transfer process, while not affecting the preparation of the income statement.

*Table of account closing results are the same, so to speak, usually we say that the assets and liabilities of the equity account is a real account, profit and loss is a virtual account, is because the latter at the end of the month when the balance is to be carried over to the profit account, and then from the beginning of the next month to start from the beginning of the calculation of the cost of zero. *

The end of the account is the end of the P&L account balance=0, profit (profit and loss) to the profit account. The table does not do so, the data is accumulated and saved, just the current period of income and expenses incurred in the cost of the accounts of the balances accumulated into the income statement, to do the accounting statement is nothing more than according to certain conditions will be the balance of the current account (or a few similar accounts are accumulated) up only. So look at the P&L sheet, you can choose from a certain period of time to the present (for example, look at the first of the month to the present, due to the settlement has not yet been made, the actual financial point of view does not make sense) of the profit and loss account. Usually we say that the balance sheet is a point in time statement, and the income statement as a period statement ( so at any given time, we have this balancing formula [assets = liabilities + equity + (income expenses)] ), there is a drawback is that if I want to go to see for example, I would like to look at the last month (October), when the month (11) of the subject details, it shows the cumulative amount of the 1-10, and the 1-11 (the table closure of the consequences), you can't look at the incurred amount of October and November separately, this demand must be developed.

*Enterprise accounting and accounting for the calculation of the closing profit and loss is more appropriate to use the table-end profit method. The use of this method has its own advantages: First, it can reduce the accounting staff in the calculation of the end of the period (month-end) workload, simplify accounting. Secondly, it is convenient for the preparation of accounting statements. At the end of the month to prepare the "income statement", according to the current period of the profit and loss accounts reflected in the closing balance directly corresponds to fill in the statement of the relevant stops of the cumulative number of the current year. As for the filling of the current month's number in the income statement, it can be found out by subtracting the amount of the corresponding columns at the end of the current period and the end of the previous period (the above drawbacks can be solved by sub-development). Thirdly, for social intermediaries to check the profit of the enterprise for the current year, it can better reflect the principle of clarity of accounting records and accounting statements. This is also the most important feature of this method of calculating the end of the profit and loss and carry forward.