Carrying Forward Child Statement Balances

Those balance sheet ledgers that represent child statement levels (such as Profit and Loss) cannot be transferred as is to the new year. Because a parent is only a representation of the total of all the ledgers on the child statement level we cannot transfer this amount as an unsupported total to the new year. Instead we nominate the account code to be used to carry forward the child statement total (eg. Reserves).

The account code used to carry this total forward need not be a balance sheet item. In our sample ledger the Profit and loss is carried forward to Reserves which is a Balance sheet level item. The effect of this is that when the Closing balance of last years Profit and Loss (the parent) is carried forward, it is posted to Reserves on the new Balance sheet.

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