How to formalize and record the use of net profit
Net profit can be distributed only by decision of the organization's owners (participants, shareholders). This rule applies to both LLCs and joint stock companies (subclause
3 p. 2 art. 67.1, paragraph 4 of Art. 66 Civil Code of the Russian Federation). In an LLC, the decision on the distribution of net profit is documented in the minutes of the general meeting of participants (clause 1, article 28, clause 6, article 37 of the Law of February 8, 1998
No. 14-FZ). There are no mandatory requirements for the minutes of the general meeting of LLC participants in the legislation. But there are details that are better to indicate.
This is the number and date of the minutes, place and date of the meeting, agenda items, signatures of participants. In a joint stock company, minutes of the general meeting of shareholders are drawn up. It differs from the minutes of the general meeting of LLC participants in that it is drawn up in two copies and has mandatory details. They are listed in paragraph 2 of Article 63 of the Law of December 26, 1995 No. 208-FZ and paragraph 4.29 of the Regulations approved by order of the Federal Financial Markets Service of Russia dated February 2, 2012.
Distribution directions
The directions for distribution of net profit can be mandatory and voluntary (i.e., by decision of the founders).
Mandatory contributions are made only by joint stock companies. Using net profit, they must create a reserve fund (capital). Every year, at least 5 percent of net profit must be allocated to the reserve fund (capital). Contributions may be terminated when the reserve fund (capital) reaches the amount provided for by the charter of the joint-stock company. The minimum size of the reserve fund (capital) is 5 percent of the authorized capital. This is stated in paragraph 1 of Article 35 of the Law of December 26, 1995 No. 208-FZ.
An LLC can also create a reserve fund (capital), but it is not obligated to do so. The size of the reserve fund (capital) and the procedure for its formation are determined by the company independently. This follows from Article 30 of the Law of February 8, 1998 No. 14-FZ.
By decision of the founders, the organization can direct its net profit:
– for the payment of dividends;
– to increase the authorized capital.
Write-off of the shortage at the expense of the net profit of the posting
Contents At least once a year, every organization carries out an operation called “inventory”. And in the course of it, a shortage of one or another property is often discovered.
This situation is not pleasant, because the company management and accountant will have to do a lot of work to find the perpetrators and compensate for the damage. There may also be a situation when the manager is ready to forgive the employee for a small mistake. However, this could backfire for a goodwill enterprise.
What should you be prepared for? Of course, it is not always possible to blame the materially responsible person for the shortage, for example, if inventory assets are subject to such a phenomenon as natural loss.
In this case, the accountant simply needs to write off the shortage by posting: Dt 20, 23, 44 - Kt 94 - writing off the cost of inventory items within the limits of natural loss. But this posting is only suitable for reflecting shortages within the standards.
Write-off entries from profit and loss
Calculations for taxes and fees." At the end of the month, the total account balance is calculated. 99, if the final balance is debit, the organization is at a loss this month, if it is a credit, it is in profit.
At the beginning of each month, the balance of account 99 is transferred from the previous month to the current month. Throughout the year, the balance of profits or losses accumulates in account 99 on an accrual basis. At the end of the year 99 is closed with final entries on the account.
84 “Retained earnings (uncovered loss).” Postings for closing the account 99 • D99 K84 - final financial result - profit. • D84 K99 - final financial result - loss.
At the beginning of next year. 99 opens again. As a result, on the account. 84, either profit (on credit) or loss (on debit) is reflected at the end of the year.
Account 84 is used to distribute profits for any needs of the organization, for example, for payments to founders. Also, if previously on the account.
Acquisitions from profit
The LLC has retained earnings hanging around for a long time. There will be no dividend payments. Is it possible to purchase fixed assets using retained earnings? Is it enough to make a protocol for profit distribution?
Here the question immediately arises: what is the meaning of the words “purchase a fixed asset at the expense of the enterprise’s retained earnings”? After all, if the enterprise is profitable and it has funds, then it can show the acquisition of fixed assets as their “ordinary” acquisition within the framework of business activities. And then, through depreciation charges, the cost of fixed assets will “settle” in expenses, which will ultimately reduce the financial result of the enterprise (and therefore its profit).
Moreover, it is simply not possible to “directly” reflect the acquisition of fixed assets in accounting using account 44.
accrued depreciation of fixed assets can be “written off” from retained earnings . That is, depreciation will be calculated not at the expense of expense accounts, but at the expense of retained earnings (enterprise capital).
What is the economic feasibility of this, given that the enterprise is already profitable according to its financial statements?
It is worth noting that the use of retained earnings is reflected in subaccount 443 “Profit used in the reporting period.” And as stated in Instruction No. 291
, the balance on this subaccount is closed only at the end of the year (i.e., account 44 is not immediately reduced).
No one forces the owners to necessarily distribute the retained profits of the enterprise.
At the same time, with regard to the direction of profit “for the development of the enterprise”, we believe that:
- if the company’s charter provides for the creation of a special fund for this (which is rare) and a rate for deduction of profits to this fund is established, then, based on the decision of the meeting of participants, deductions are made to this fund at the expense of retained earnings;
- in other cases, this means that the founders simply “give the go-ahead” to spend the money on the acquisitions provided for by the founders’ decision. These acquisitions will ultimately reduce the financial results and profit of the next reporting period expenses That is, such “purchases” are reflected as current acquisitions.
New in accounting for expenses and net profit
Accounting, taxation, reporting, IFRS, analysis of accounting information, 1C: Accounting
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05/23/2001 subscribe to our channel The new chart of accounts provides for a slightly different procedure for recording organizational expenses and accounting for net profit than was the case until recently.
In this article, Professor of the St. Petersburg Trade and Economic Institute Viktor Vladimirovich Patrov talks about these changes, and also proposes a new methodology for accounting for net profit.
The article was provided by SPUTNIK-101, St. Petersburg. Until recently, all expenses of an organization were reflected in accounting in three ways: Until recently, all expenses of an organization were reflected in accounting in three ways: 1. Capitalization (inclusion of expenses in the value of an asset); 2.
Write-off to profit and loss account; 3.
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| boa.84 |
| Hello, to which account in accordance with the new chart of accounts should I now write off materials at the expense of net profit 90.8 or 91? Thank you |
| I want to draw the moderator's attention to this message because: Notification is being sent... |
| Tatiana [e-mail hidden] Republic of Belarus, Minsk, Molodechno Wrote 3224 messages Write a private message Reputation: 673 | #2[532023] August 20, 2012, 15:40 |
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If the result does not depend on the method of solution, it is mathematics, and if it does, it is accounting.| Tananda// [email hidden] Wrote 13039 messages Write a private message Reputation: 2392 | #3[557479] November 28, 2012, 11:07 |
Notification is being sent...
all women are angels, but when their wings are clipped, they have to fly on a broom| Victoria [email protected] Belarus Wrote 904 messages Write a private message Reputation: | #4[557510] November 28, 2012, 11:42 |
Tata // wrote:
Tell me, if I want to write off envelopes at the expense of profit (there is no accounting of outgoing correspondence), then I don’t charge VAT?
no no need to charge
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| Tananda// [email hidden] Wrote 13039 messages Write a private message Reputation: 2392 | #5[557512] November 28, 2012, 11:45 |
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all women are angels, but when their wings are clipped, they have to fly on a broom| Volmerka [email protected] Wrote 4570 messages Write a private message Reputation: 729 | #6[557517] November 28, 2012, 11:49 |
Tata // wrote:
Tell me, if I want to write off envelopes at the expense of profit (there is no accounting of outgoing correspondence), then I don’t charge VAT?
Why at the expense of profit?
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If you've been scammed, spread your wings...| Tananda// [email hidden] Wrote 13039 messages Write a private message Reputation: 2392 | #7[557519] November 28, 2012, 11:53 |
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all women are angels, but when their wings are clipped, they have to fly on a broom| Volmerka [email protected] Wrote 4570 messages Write a private message Reputation: 729 | #8[557522] November 28, 2012, 11:58 |
Tata // wrote:
I don’t have time to make lists where I sent them, I have the right to write them off at the expense of profit, the employer doesn’t mind
The fact that you have the right is undeniable. All clear
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If you've been scammed, spread your wings...| Tasenka [email hidden] Belarus, Minsk Wrote 1092 messages Write a private message Reputation: 163 | #9[557525] November 28, 2012, 12:00 |
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| Volmerka [email protected] Wrote 4570 messages Write a private message Reputation: 729 | #10[557534] November 28, 2012, 12:07 |
Tasenka wrote:
Listen, where can I read about the fact that you can write off expenses only if you have mailing lists???
And I would too...
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Write-off of materials due to net profit posting
Contents Retained earnings (uncovered loss).”
The total balance of this account at the time of acquisition does not change. Investments by themselves at the expense of net profit do not lead to a decrease in the balance sheet currency. Debit 84.1 “Profit to be distributed” Credit 84.3 “Retained earnings in circulation” - shareholders decided to use net profit for production development; Debit 08 Credit 60 - reflects the costs of purchasing fixed assets; Debit 19 Credit 60 - VAT on the cost of the fixed asset is taken into account; Debit 01 Credit 08 - fixed asset accepted for accounting; Debit 84.3 “Retained earnings in circulation” Credit 84.4 “Retained earnings used” - net profit was actually directed (used) to the purchase of fixed assets; Debit 20, 25, 26 Credit 02 - depreciation accrued.
According to paragraph 1 of Art. Example: Turnover of Buttercup LLC for 2014: Account Dt, thousand.
Accounting
In accounting, the net profit received at the end of the year is reflected in the credit of account 84 “Retained earnings (uncovered loss).” The organization organizes analytical accounting for this account independently. For example, using the subaccounts “Net profit”, “Net profit subject to distribution”, “Use of net profit”.
When forming reserve capital, make a note:
Debit 84 Credit 82
– net profit was used to form a reserve fund (capital) according to the standards approved by the charter.
Reflect the accrual of dividends (both annual and interim) using one of the following entries:
Debit 84 Credit 75-2
– dividends are accrued to the founder, who is not an employee of the organization;
Debit 84 Credit 70
– dividends are accrued to the founder, who is an employee of the organization.
See also the procedure for calculating and paying dividends
If net profit is used to cover losses from previous years, no entries need to be made. After all, the result on account 84 will be formed automatically. This account can only contain retained earnings or uncovered losses. Accordingly, the profit of the reporting year is added to the uncovered loss of previous years (Account 84 Credit) (Account 84 Debit). Thus, the balance of account 84 is determined.
The founders can use net profit to increase the authorized capital. For example, to increase the investment attractiveness of the organization. After the change in the size of the authorized capital has been registered, make an entry:
Debit 84 Credit 80
– reflects the increase in the authorized capital due to net profit.
If the founders want to use net profit for other purposes, for example, for charity or paying for travel for employees, such expenses cannot be reflected using account 84. These will be other expenses that also affect the financial result of the organization. Accordingly, such expenses must be reflected in the debit of account 91-2. Similar explanations are given in letters of the Ministry of Finance of Russia dated December 19, 2008 No. 07-05-06/260 and dated June 19, 2008 No. 07-05-06/138.
One more thing. Let's say the organization decided to create special funds using net profit. To account for their movement, the accountant can maintain analytical accounting on account 84. And the costs themselves meet the definition of expense, which is given in PBU 10/99. This means that the score 91-2 must be used. The correctness of this approach is confirmed by the Ministry of Finance of Russia in the recommendations from the appendix to the letter of the Ministry of Finance of Russia dated February 6, 2015 No. 07-04-06/5027).
Situation: how to reflect in accounting the use of net profit received at the end of the year for the purchase of property (fixed assets, materials, etc.)?
If an organization uses net profit to purchase property (fixed assets, materials, etc.), then reflect its use in the analytical accounting of account 84 “Retained earnings (uncovered loss).”
Correspondence of accounts for this case is not provided for in the Chart of Accounts. Analytical accounting for account 84 allows you to control the availability and expenditure of retained earnings. That is, in analytical accounting you can separate the funds used as financial security for the purchase of new property and those funds that have not yet been used (letter of the Ministry of Finance of Russia dated November 14, 2012 No. 07-02-12/60, dated March 21, 2011 No. 07-02-06/31, Instructions for the chart of accounts).
Accordingly, there is no need to make entries to account 84. And reflect the expenses for the purchase of materials (fixed assets, etc.) in accounting according to the general rules.
More about this:
- How to register and reflect in accounting the acquisition of fixed assets;
- How to register and reflect the receipt of materials in accounting;
- How to reflect the purchase of goods in accounting.
Postings for writing off materials in accounting
Materials are one of the most important components in the cost of manufactured products, so they must be capitalized in a timely manner and the correct write-off must be monitored.
Let's consider the accounting entries generated when materials are written off for production, shortages, damage and gratuitous transfer.
Materials are current assets that are used in production as a resource element. Materials should be understood as a whole group of assets that can be used in production, namely semi-finished products, raw materials, fuel, components (spare parts) and other goods and materials for industrial purposes. To account for materials, account 10 “Materials” is used, which is intended for analytical accounting by type of inventory.
This account is active, so all receipts are displayed as a debit, and write-offs as a credit.
Material accounting has the following objectives:
Postings for materials and inventory items (10th account)
In accounting, postings to account 10 (Materials) play an important role. The cost of production and the final result of any type of activity - profit or loss - depend on how correctly and timely they were capitalized and written off. In this article we will look at the main aspects of accounting for materials and posting them.
These nomenclature groups include assets that can be used as semi-finished products, raw materials, components and other types of inventory assets for the production of products and services, or used for the own needs of an organization or enterprise. Control of their safety Reflection in accounting of all business transactions related to the movement of goods and materials (for cost planning and management and financial accounting) Formation of cost (materials, services, products).
Control of standard stocks (to ensure a continuous cycle of work)
Accounting entries for writing off materials for production, damage, sale
Materials are the main element of current assets, which are used as an intermediate element in the activities of the organization. Let's look at the write-off of materials for production, sale and damage.
to the organization is maintained at the actual purchase price (without). Consumption of materials from the warehouse by production or managers of the organization is their internal movement. When materials are disposed of or consumed in production, accounting is carried out using the following methods:
- FIFO (first-in-first-out)
- Piece by piece
- Weighted average price
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Postings: Account Debit Account Credit Description Amount Document-basis Materials transferred to main production cost Limit-fence card Requirement-invoice Invoice To auxiliary production cost cost For general production needs cost cost For general economic needs cost cost Materials can be:
Accounting entries for disposal of materials using examples
Let's consider the theoretical foundations that need to be relied upon when organizing the accounting of materials at the stage of their disposal.
We will also get acquainted with the accounting records of the facts of the economic life of the enterprise, that is, with the postings as a result of solving situational problems.
Let's study how accounting records are kept for the disposal of materials under account 10. Contents Materials received by the enterprise are acquired for some purpose: either for use in the production process directly, or for organizing the management process.
Therefore, there comes a time when materials are deregistered.
Upon disposal, their value must be assessed. Let's say an employee came to the warehouse for a certain name of material, and a release was made according to the request-invoice. At what cost should the accountant write off this item of inventory in accounting?
After all, in a warehouse it may turn out that units of the same material have different actual costs due to inflation, for different suppliers.
Accounting entries for net profit
Accounting Expand the list of categories Subscribe to a special free weekly newsletter to keep abreast of all changes in accounting: Join us on social media.
networks: VAT, insurance premiums, simplified tax system 6%, simplified tax system 15%, UTII, personal income tax, penalties We send letters with the main discussions of the week > > > Tax-tax December 4, 2015 Net profit - the posting of its reflection will be discussed in the article - includes the amount of turnover according to the company's current chart of accounts, accumulating all incoming and outgoing transactions for a certain period of time.
It is calculated by any company and individual entrepreneur, since it is the result of entrepreneurial activity.
Net profit (hereinafter referred to as NP) is calculated at the end of the year by resetting the totals in the accounting accounts. This indicator consists of the company's revenues and expenses, adjusted for tax payments.
Write-off of materials step-by-step instructions for accounting
Any organization acquires materials for the company’s activities not for their own sake. And the purchased valuables will not lie dead weight in the warehouse for the director to admire. They are intended for use in production, sales or administrative purposes.
Therefore, purchased materials are subsequently consumed in production. However, in the warehouse the storekeeper or warehouse manager is responsible for them, and the materials are taken into account on account 10. When the materials leave the warehouse, the situation will change: the account and the person in charge will change. In this article we will analyze the write-off of materials with step-by-step instructions for this procedure for you.
1. Accounting entries for write-off of materials 2.
Registration of write-off of materials 3. Write-off of materials - step-by-step instructions if not all are consumed 4. Norms for write-off of materials for production 5.
Example of a write-off act 6. Methods for writing off materials for production 7.
The procedure for writing off materials in accounting (nuances)
> > > Tax-tax January 12, 2021 Documents and forms will help you: Writing off materials in accounting is a strictly regulated and specific process. We will talk about the legal requirements for writing off materials and the nuances of this procedure in various companies in our article. Clause 16 of PBU “Accounting for inventories” 5/01 (approved by order of the Ministry of Finance of Russia dated 06/09/2001 No. 44n) allows 3 options for writing off inventories:
- average cost (AC);
- FIFO method.
- at cost per unit of inventory (CU);
The write-off method chosen by the company must be fixed in the accounting policy and applied consistently from period to period.
During the year, you can change the method used only in one case: if this method is abolished by law.
Writing off expenses against profit
Is it possible to write off VAT (Dt 6442) on tax invoices that the supplier has not registered and does not intend to register? If so, is a protocol of founders needed for this?
Let us immediately warn you - simply writing off expenses from account 44 (retained earnings), for example, so that they are not withdrawn by the tax authorities or if we are afraid to show some non-business expenses, is methodologically incorrect. And if the amounts of such expenses are also significant, then this will lead to a distortion of financial reporting data, which means that it may be considered unreliable.
What are these conclusions based on?
Firstly , the disposal of retained earnings is the exclusive competence of the general meeting of participants . That is, it is the participants of society and only they who have the right to decide what to do with the “net” profit of the enterprise.
Only in exceptional cases does P(S)BU allow the possibility of reflecting expenses by reducing equity capital (through account 44). We are talking about very narrow cases . Which ones? Well, for example, when, following accounting standards, expenses need to be reflected by adjusting the balance of retained earnings/uncovered loss at the beginning of the year (i.e. account 44) when:
— correction of errors of previous years (including correction of last year’s expenses/income) ( clause 4 of P(S)BU 6 “Correcting errors and changes in financial statements”
);
- retrospective recalculation - when accounting policies change in the event of an impact on previous periods ( clause 12.1 P(S)BU 6
).
In all other cases, when “touching” retained earnings is not expressly permitted by P(S)BU, any entries relating to the distribution and use of net profit (retained earnings of the enterprise) can be made only on the basis of a decision (minutes) of the general meeting of participants.
Secondly , despite the fact that the owners of enterprises have the right to freely dispose of net profit , this does not mean that the enterprise can finance any of its expenses from profits. After all, they have their own accounting destiny. If, according to accounting rules, any payments of an enterprise are expenses, then it would be incorrect to write them off against profits . Otherwise, the financial result will be distorted.
Accounting for expenses is subject to P(S)BU 16 “Expenses”
.
And if the expenses (costs) of the enterprise correspond to the concept of “expenses” (i.e., a decrease in economic benefits is expected in the form of a decrease in assets or an increase in liabilities , clause 3 of NP(S)BU 1
,
clause 5 of P(S)BU 16
), then they are taken into account according to the rules of this standard.
That is, they are recognized as expenses of a certain period simultaneously with the recognition of the income for which they were incurred, or (if they cannot be directly linked to income) as expenses in the period they were incurred ( clause 7 of P(S)BU 16
).
This means that in any case they influence the financial result .
Failure to reflect expenses will lead to distortion of financial statements : underestimation of expenses and overestimation of financial results. And the information provided in the financial statements must be reliable ( clause 3, section III NP(S)BU 1
).
For example, the same situation with tax invoices, which remained unregistered by the supplier. If a tax invoice is not registered, the company loses the right to a tax credit. And in essence, the VAT paid to the supplier becomes a non-refundable tax. This means (if tax is not included in the initial cost of the asset), these are expenses of the enterprise. True, in this case, the enterprise will have the right to expenses only after it becomes certain that the supplier will no longer register the VAT (i.e., the amount of such VAT will indeed become non-refundable). In particular: if 1095 days have passed since the date of drawing up the NN or if the supplier is liquidated before its completion.
The same applies to the payment of various types of incentive payments for employees at the expense of profits. P(S)BU 26
directly establishes (
clauses 5
and
8
) that bonuses and other incentive payments are considered:
- or current payments to employees (if they are payable within 12 months after the end of the period in which the employees perform the relevant work);
- or an obligation through the creation of security in the reporting period, if the work performed by employees in this period gives them the right to receive such payments in the future.
That is, these are expenses of the enterprise. They should be covered through "expense" accounts, and not "directly" through account 44.
And only for enterprises in the state and municipal sectors of the economy, the possibility of “spending” profits on material incentives for employees is provided for at the legislative level (see clause 1.2 of the Regulations on the procedure for accounting for individual assets and operations of enterprises in the state, municipal sectors of the economy..., approved by order of the Ministry of Finance dated December 19. 2006 No. 1213
).
Moreover, if we, for example, look at Instruction No. 291
*, then account 44 (debit of the account) does not correspond, for example, with the credit of account 66.
* Instructions on the application of the Chart of Accounts for accounting assets, capital, liabilities and business operations of enterprises and organizations, approved by order of the Ministry of Finance of Ukraine dated November 30, 1999 No. 291
.
Although, of course, no one has the right to prohibit owners from disposing of their profits. And, for example, pay any incentive payments to employees at its expense (then such payments will actually be made from retained earnings (account 44).
But again, these are not the cases discussed in the question.
As for the tax authorities, for obvious reasons they will only be in favor if expenses go past expense items and are written off by the enterprise from retained earnings.
