Special Retained Earnings Account

Question

At the end of a fiscal year the system carries forward the balance of certain accounts to a special retained earnings account and sets them to zero. Which accounts are treated in this way?

• A. Balance sheet and P&L accounts
• B. P&L accounts
• C. Accounts managed only on the basis of open items
• D. Balance sheet accounts

Explanation

During SAP S/4HANA year-end closing, balances from Profit and Loss (P&L) accounts are transferred to the retained earnings account. After the transfer, P&L accounts are reset to zero so the new fiscal year starts with fresh operating results.

Why the other options are incorrect

• A. Balance sheet accounts are carried forward, not reset.
• C. Open item managed accounts (such as Accounts Receivable and Accounts Payable) retain their open items and balances.
• D. Balance sheet accounts continue into the next fiscal year without being transferred to retained earnings.