Equity accounts pile up year after year

Jan 17, 2009 1 Replies

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.

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