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Question
Why don't the Net Ordinary Income amount on the P&L and the Net Income on Balance Sheet match? Both the P&L and Balance Sheet are FYE reports.
Submitted: 34 days and 7 hours ago.
Category: Finance
Value: $30
Status: CLOSED
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State/Country relating to question: California
Already Tried:
I don't know what to look for to correct this problem, if it is actually a problem.
Posted by
JK_CPA
34 days and 6 hours ago.
Answer
Hello,
Thanks for your question. Net Income should not appear on the Balance Sheet. I'm assuming you meant the Retained Earnings Statement instead.
Were there any irregular items on the income statement (P&L) such as Discontinued Operations, Extraordinary Items, Cumulative Effect of Accounting Method Change or Unusual Gains/Losses?
Was there other Comprehensive Income (this bypasses the income statement) and usually is due to unrealized gains/losses on investments?
Should there have been a correction to prior period net income such as inventory error to the beginning balance of Retained Earnings on the Retained Earnings statement?
Were Dividends included in net income by error?
Hope these ideas help. If you have any questions, let me know.
Sincerely,
34 days and 6 hours ago.
Reply
The Net Income, along with Common Stock and Retained Earnings, is under "Equity" on the Balance Sheet. Should this Net Income be the same amount as the Net Ordinary Income on the P&L??
Accepted Answer
OK- that part should be called the Stockholders' Equity.
No, that "net income" is different from the net income on the P&L. Per GAAP, it should be called "Accumulated Other Comprehensive Income" on the Equity section of the Balance Sheet. This amount may include unrealized gains/losses on available-for-sale securities, foreign currency transalation gains/losses, excess of additional pension liability over unrecognized prior service cost and/or unrealized gains and losses on certain hedging transactions.
Hope this helps!
Expert:
JK_CPA
Pos. Feedback:
100.0 %
Accepts:
Answered:
10/20/2009
Certified Public Accountant (CPA)
with 5 years Accounting and 18 years tax experience.
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