We have seen an increase in support calls recently from clients who have been reviewing and editing their Sage 50 / Peachtree general ledger chart of accounts. The call is usually precipitated by an “out of balance” situation in the general ledger, following an “account editing” session. More often than not, the culprit is a change in “account type” within the Sage 50 / Peachtree general ledger.

Changing the account type in Sage 50 / Peachtree can, in some instances, cause your general ledger to go out of balance, or cause the retained earnings balance to be incorrect. Once an account type has been chosen for an equity account, it should never be changed without first carefully considering – and planning for – the consequences of the change..

The definitions for Sage 50 / Peachtree equity accounts are as follows:

Equity – Doesn’t Close – This is the equity account that is carried forward from one fiscal year to the next, such as capital stock and additional paid in capital.

Equity – Gets Closed – This represents equity that is closed out at the end of the fiscal year, with balances transferred to the retained earnings account, such as dividends or other distributions.

Equity – Retained Earnings – This represents the earned capital of the enterprise. Its balance is the cumulative, lifetime earnings of the company, net of dividends and other distributions paid to owners or stockholders. Every Sage 50 / Peachtree company must have a retained earnings account, and there can only be one retained earnings account in a Sage 50 / Peachtree) company.

If you have any questions pertaining to Sage 50 / Peachtree) equity accounts, or are contemplating other changes to your chart of accounts setup,  please contact us at TriStar to discuss your desired changes so we can help you head off any nasty little “out of balance” situations.