How To make Transaction (Share Of Profit) ?

Understanding Share of Profit Allocation

• The "Share of Profit" transaction does not involve any Cash or Bank account. It is solely used to allocate profit to partners.
• When this transaction is recorded, the amount is deducted from Retained Earnings and added to the Capital Account of each partner.
• If a partner wants to withdraw their share of profit, a separate "Drawings" transaction must be recorded.
• If a partner chooses to reinvest their profit into the business, no additional entry is required, as the profit is already added to their Capital Account.

📌 Key Point: Share of Profit is only an allocation entry, while actual withdrawals require a separate transaction under Drawings.

TO Add "Share Of Profit"

1. Navigate to Capital Accounts from 'Control Panel' menu .
2. Navigate to Receipts & Payments tab
3. Click "New Transaction". 
   
   
    
4. Select transaction Date.
5. Transaction Code will generate automatically
6. Select "Receive Money" in 'Type' .
7. Select "Share Of Profit" as the Transaction Type.
8. Add Description if any.
9. Select the Capital Account (Partner’s Name).
10. Select "Share Of Profit" as the subaccount.
11. Enter the amount and description.
12. Click Save.