The net profit or loss amount shown on the default Income Statement report will affect the amount for Retained Earnings on the default Balance Sheet report.

The amount for Retained Earnings on the default Balance Sheet report is calculated as a sum of all income accounts balances minus all expense account balances, plus the balance of an equity account named Retained Earnings, if present.

Note that year-end closing transactions will zero out all income and expense account balances up to the date of the closing transaction, and those balances will be transferred to the equity account selected for the closing transaction.

If you have an equity account named Retained Earnings, this will be included in the amount for Retained Earnings on the balance sheet. If you do not want this amount to be included, you can rename the account to have a different name that is not Retained Earnings. If you do not have an equity account named Retained Earnings, the amount for Retained Earnings on the default Balance Sheet report will match the net profit or loss on the default Income Statement report for the same period since the last year-end closing transaction.

For example, you create a year-end closing transaction for 12/31/2023 and move the income and expense account balances to an equity account that is simply named Equity. Then you run the default Income Statement report for the date range 1/1/2024 to 4/30/2024 and see a net profit of $5,000. Then you run the default Balance Sheet report with an end date of 4/30/2024. If you don't have an equity account named Retained Earnings, the amount for Retained Earnings on the default Balance Sheet report will show $5,000 for the net profit for the period. If you do have an equity account named Retained Earnings that has a balance of $20,000, the amount for Retained Earnings on the default Balance Sheet report will show $25,000 since the $5,000 net profit will be added to the $20,000 balance of your Retained Earnings equity account.