Accounting V2: Equity Overview

By default, PayHOA generates four equity accounts: Opening Balance, Excluded, Net Income, and Retained Earnings.
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​Opening Balance - an equity account used to bridge the gap between your starting balances and the general accounting equation of assets = liabilities + equity. For example, if your bank account is given a starting balance of $10,000.00, then Opening Balance will adjust to be $10,000.00. If you then add $10,000.00 worth of liability starting balances, Opening Balance will change to $0.00. Once all of your starting balances are entered, Opening Balance will typically be at $0.00 though this may not always be the case depending on prior financials.
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​Excluded - an equity account used to track transactions marked as excluded. This is primarily used for situations in which you would increase or decrease a bank balance, but do not want it to affect any revenues or expenses. An example would be an opening deposit for a new bank account in which the old bank account is not in the system.
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​Net Income - an equity account used as a rolling total of your income and your expenses. Net Income will match the total on your Profit vs Loss Summary for the year.
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​Retained Earnings - an equity account that represents the total of your net incomes from previous years. Retained earnings is automatically updated at the end of each year when the system automatically closes your yearly financials. Specifically, at the end of the year, any amount in Net Income is automatically moved over to Retained Earnings.