Equity accounts pile up year after year

Posted by Chips on January 16, 2009, 10:36 pm

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As years go by, the equity accounts, like Owner Draw, just keeps piling up.
A balance sheet does not restrict it to just the year in question.

Is there a way to zero out an account like Owner's Draw at the end of a year
so it starts fresh? So that a balance sheet will show what piled up in that
account for that year?

Thanks,

GC

Posted by Haskel LaPort on January 16, 2009, 11:45 pm

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> As years go by, the equity accounts, like Owner Draw, just keeps piling

> up. A balance sheet does not restrict it to just the year in question.

> Is there a way to zero out an account like Owner's Draw at the end of a

> year so it starts fresh? So that a balance sheet will show what piled up

> in that account for that year?

> Thanks,

> GC

Yes there is. do what accountants do. On the first day of every new year
make a journal entry zeroing out any owner's draw, owner's contributions,
and the prior year's income or loss to the Owner's Capital Account.