Profit for the Year: debit or credit?
Profit for the Year increases on the credit side and decreases on the debit side: its normal balance is a credit.
Equity is the owners’ claim on the business: capital, reserves and retained profit. It increases with a credit.
Name in each convention
Account names and codes follow each convention; an account that does not exist in a convention is not offered there.
| Convention | Account |
|---|---|
| United States (US textbooks) | — |
| Spain (PGC 2007) | 129 Resultado del ejercicio |
| France (PCG 2025) | 120 Résultat de l’exercice - bénéfice |
| Germany (generic accounts) | Jahresüberschuss |
Practice entries that use this account
- Closing the revenue accounts at year end
- Closing the expense accounts at year end
- Transferring a sole trader’s profit to capital
- Transferring a sole trader’s loss to capital
- Closing a company’s year: revenues and expenses to the result account
- Deciding a cash dividend
- Deciding and paying a dividend the same day
- Allocating profit to the legal reserve
- Carrying a company’s profit forward after the shareholders’ meeting
- Carrying a company’s loss forward after the shareholders’ meeting