Importance The crisis in the domestic economy caused the growing importance of accounting for and reporting of own and borrowed sources of funding. The essential indicator of such funding is retained earnings (uncovered loss) of an economic entity, which increase should generate increments of readily obtainable assets of a corporation. Objectives The objective of the study is to perform critical evaluation of the accounting treatment of retained earnings (uncovered loss) of an economic entity. Methods We evaluated the existing accounting treatment of retained earnings (uncovered loss) of an economic entity by using the accounting methods. Results We analyzed the origin of solving the issues related to accounting for retained earnings (uncovered loss) at different stages of the Russian accounting reform. The article addresses the specifics of accounting treatment of retained earnings in terms of the concept of socio-economic development of Russia until 2020 and recommendations of the Ministry of Finance of the Russian Federation on generation and disclosure of information on innovation, modernization and environmental activities in accounting records and financial statements. The study includes the investigation of problems on relationship of retained earnings and assets of an economic entity. We identified some deficiencies of the accounting treatment of retained earnings (uncovered loss), which mainly include information overloading of the Retained Earnings (Uncovered Loss) account. We also offered uniquely designed versions of detailed processes of formation and use of retained earnings on accounts and in financial statements. Conclusions and Relevance We conclude that in the context of the need to improve the transparency of accounting and reporting of retained earnings (uncovered loss), the proposed accounting treatment will contribute to strengthening control over actually used profit (without regard to directions of its use), and improving information and analytical capacity of financial statements of an economic entity.
Bychkova S.M., Badmaeva D.G. Uchetno-analiticheskie aspekty formirovaniya i ispol'zovaniya sobstvennogo kapitala organizatsii [Accounting and analytical aspects of formation and use of a company’s equity capital]. Mezhdunarodnyi bukhgalterskii uchet = International Accounting, 2014, no. 19, pp. 25–32.
Druzhilovskaya T.Yu., Romanova S.M. Pokazateli dokhodov, raskhodov i finansovykh rezul'tatov v uchete i otchetnosti: teoreticheskii i prakticheskii aspekty [Indicators of income, expense and financial results in accounting and reporting: theoretical and practical aspects]. Mezhdunarodnyi bukhgalterskii uchet = International Accounting, 2014, no. 31, pp. 2–11.
Zabrodin I.P. Obosnovanie napravlenii razvitiya ucheta dolgosrochnykh investitsii i istochnikov ikh finansirovaniya [Rationale for development of accounting for long-term investments and their funding sources]. Vestnik Voronezhskogo gosudarstvennogo universiteta. Ser. Ekonomika i upravlenie = Bulletin of Voronezh State University. Ser. Economics and Management, 2010, no. 2, pp. 209–215.
Kevorkova Zh.A., Sapozhnikova N.G., Savin A.A. Plan i korrespondentsiya schetov bukhgalterskogo ucheta. Bolee 10000 provodok [Chart of Accounts and account correspondence. Over 10000 entries]. Moscow, Prospekt Publ., 2015, 592 p.
Sapozhnikova N.G. Formirovanie sistematizirovannoi informatsii o neraspredelennoi pribyli korporatsii [Generating organized information on retained earnings of a corporation]. Vestnik Voronezhskogo gosudarstvennogo universiteta. Ser. Ekonomika i upravlenie = Bulletin of Voronezh State University. Ser. Economics and Management, 2014, no. 2, pp. 79–84.
Sapozhnikova N.G. Istochniki finansirovaniya innovatsionnoi deyatel'nosti korporatsii: uchetnyi aspekt [Sources of financing the innovation activity of corporations: an accounting aspect]. Mezhdunarodnyi bukhgalterskii uchet = International Accounting, 2014, no. 34, pp. 2–7.
Skripkina O.V. Bukhgalterskii uchet kak informatsionnaya baza prinyatiya reshenii po upravleniyu sobstvennym kapitalom [Accounting as an information base for decision-making on equity capital management]. Mezhdunarodnyi bukhgalterskii uchet = International Accounting, 2014, no. 23, pp. 34–38.
Sokolov V.Ya. Kapitalizatsiya kapitala [Capitalization of capital]. Bukhgalterskii uchet = Accounting, 2011, no. 7, pp. 95–96.
Sotnikova L.V. Bukhgalterskaya otchetnost' organizatsii. 2008–2009 god [Financial statements of an organization. 2008–2009]. St. Petersburg, Piter, BINFA Publ., 2009, 403 p.
Sotnikova L.V. Ispravlenie oshibok: vzaimosvyaz' PBU 22/2010 i PBU 18/02 [Correction of errors: relationship of RAS 22/2010 and RAS 18/02]. Bukhgalterskii uchet = Accounting, 2012, no. 10, pp. 80–89.
Sotnikova L.V. Uchet ispol'zovaniya chistoi pribyli [Accounting for net profit use]. Bukhgalterskii uchet = Accounting, 2014, no. 5, pp. 80–85.