![]() ![]() We have covered the basics of equity and the importance of proper accounting. This account should track all distributions for the year.Īt the end of the year, the distribution account should be closed out to the retained earnings/members equity account because it makes it easier to get the equity to balance. For all companies, a separate distribution account should be set up within the general ledger. But if you have to unwind in the future, the time it would take to do that could be substantial. Sure, these accounts could be combined into one account. This is to provide a way to track the set-up and subsequent contributions. When you have subsequent contributions, such as capital calls, these amounts should be booked into a new contribution account. The amount of the initial set-up should be its own account and, barring a sale of ownership, this account should never be touched after the initial set-up.
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