{"id":57143,"date":"2015-05-17T18:37:35","date_gmt":"2015-05-17T11:37:35","guid":{"rendered":"https:\/\/bahtera.jp\/balance-of-payments\/"},"modified":"2026-09-12T15:24:11","modified_gmt":"2026-09-12T08:24:11","slug":"balance-of-payments","status":"publish","type":"post","link":"https:\/\/bahtera.jp\/en\/balance-of-payments\/","title":{"rendered":"Cut-off in Accounting Systems and Handling of Retained Earnings"},"content":{"rendered":"<p>Transferring current period profits to retained earnings signifies zeroing out the P\/L account balances. The system cut-off is typically performed at the fiscal year-end to eliminate the burden of transferring P\/L account balances such as depreciation expenses.<\/p>\n\t\t\t\t<a href=\"https:\/\/bahtera.jp\/en\/accounting-system-indonesia\/\" class=\"st-cardlink\" aria-label=\"Accounting Systems in Indonesia\">\r\n\t\t\t\t<div class=\"kanren st-cardbox\" >\r\n\t\t\t\t\t\t\t\t\t\t<dl class=\"clearfix\">\r\n\t\t\t\t\t\t<dt class=\"st-card-img\">\r\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<img decoding=\"async\" width=\"150\" height=\"150\" src=\"https:\/\/bahtera.jp\/wp-content\/uploads\/2025\/03\/indonesia-12-150x150.png\" class=\"attachment-st_thumb150 size-st_thumb150 wp-post-image\" alt=\"Infographic structuring accounting systems in Indonesia, highlighting SaaS services, adoption rates, and automation trends\" srcset=\"https:\/\/bahtera.jp\/wp-content\/uploads\/2025\/03\/indonesia-12-150x150.png 150w, https:\/\/bahtera.jp\/wp-content\/uploads\/2025\/03\/indonesia-12-100x100.png 100w\" sizes=\"(max-width: 150px) 100vw, 150px\" \/>\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/dt>\r\n\t\t\t\t\t\t<dd>\r\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<p class=\"st-cardbox-t\">Accounting Systems in Indonesia<\/p>\r\n\t\t\t\t\t\t\t\r\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<div class=\"st-card-excerpt smanone\">\r\n\t\t\t\t\t\t\t\t\t<p>The adoption rate of SaaS-based accounting systems in Indonesia is less than 8%, despite the advancement of SaaS technology. The continuous launch of new\u2026<\/p>\n\t\t\t\t\t\t\t\t<\/div>\r\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<p class=\"cardbox-more\">\u7d9a\u304d\u3092\u898b\u308b<\/p>\r\n\t\t\t\t\t\t\t\t\t\t\t\t\t<\/dd>\r\n\t\t\t\t\t<\/dl>\r\n\t\t\t\t<\/div>\r\n\t\t\t\t<\/a>\r\n\t\t\t\t\n<div class=\"article-point\" id=\"key-takeaways\">\n<h2 class=\"article-point-title\">What this article covers<\/h2>\n<ul>\n<li>Transferring current period profits to retained earnings zeroes out P\/L account balances.<\/li>\n<li>At the fiscal year start cut-off, complete unshipped sales and purchase data and reset inventory.<\/li>\n<li>Offset trial balance balances with transfer journal entries and input previous fiscal year&#8217;s B\/S accounts.<\/li>\n<li>Cash flow statements are prepared using both direct and indirect methods to reflect cash movements.<\/li>\n<li>Indonesia&#8217;s current account deficit highlights the challenge of creating domestic value-added to meet internal demand.<\/li>\n<\/ul>\n<\/div>\n<p><script type=\"application\/ld+json\" id=\"wprestapi-ai-jsonld\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"BlogPosting\",\"@id\":\"https:\/\/bahtera.jp\/en\/balance-of-payments\/#article\",\"headline\":\"Cut-off in Accounting Systems and Handling of Retained Earnings\",\"description\":\"Transferring current period profits to retained earnings zeroes out P\/L account balances. At the fiscal year start cut-off, complete unshipped sales\u2026\",\"mainEntityOfPage\":{\"@type\":\"WebPage\",\"@id\":\"https:\/\/bahtera.jp\/en\/balance-of-payments\/\"},\"inLanguage\":\"en\",\"datePublished\":\"2015-05-17T18:37:35\",\"dateModified\":\"2026-09-04T10:54:02\",\"author\":{\"@type\":\"Person\",\"name\":\"yamazou\"}},{\"@type\":\"ItemList\",\"@id\":\"https:\/\/bahtera.jp\/en\/balance-of-payments\/#key-takeaways\",\"name\":\"What this article covers\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Transferring current period profits to retained earnings zeroes out P\/L account balances.\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"At the fiscal year start cut-off, complete unshipped sales and purchase data and reset inventory.\"},{\"@type\":\"ListItem\",\"position\":3,\"name\":\"Offset trial balance balances with transfer journal entries and input previous fiscal year's B\/S accounts.\"},{\"@type\":\"ListItem\",\"position\":4,\"name\":\"Cash flow statements are prepared using both direct and indirect methods to reflect cash movements.\"},{\"@type\":\"ListItem\",\"position\":5,\"name\":\"Indonesia's current account deficit highlights the challenge of creating domestic value-added to meet internal demand.\"}]}]}<\/script><\/p>\n<h2>Handling of Retained Earnings When Cutting Off at the Beginning of the Fiscal Year<\/h2>\n<p>Cut-off refers to the process of resetting the system and carrying over past data when restarting. If this occurs at the beginning of the fiscal year, all unshipped (or unreceived) sales and purchase data are completed, inventory impact factors are reset, and all inventory data is shipped out to empty it, before re-entering the previous fiscal year&#8217;s ending inventory balance.<\/p>\n<div class=\"graybox\">\n<div class=\"maruno\">\n<ol>\n<li>Complete all unshipped (or unreceived) sales and purchase data to reset inventory impact factors.<\/li>\n<li>Ship out all inventory data to reset.<\/li>\n<li>Enter the previous fiscal year&#8217;s ending inventory balance.<\/li>\n<\/ol><\/div>\n<\/p><\/div>\n<p>Accounting processes can be completed by the end of the month at the latest, so all unsettled receivables and payables data are completed to reset accounting impact factors. The trial balance (T\/B) balances are reset with offset journal entries, and the previous fiscal year&#8217;s B\/S accounts are entered with transfer journal entries.<\/p>\n<div class=\"graybox\">\n<div class=\"maruno\">\n<ol>\n<li>Complete all unsettled receivables and payables data to reset accounting impact factors.<\/li>\n<li>Reset trial balance (T\/B) balances with offset journal entries.<\/li>\n<li>Enter the previous fiscal year&#8217;s T\/B B\/S accounts with transfer journal entries.<\/li>\n<\/ol><\/div>\n<\/p><\/div>\n<p>During this process, if necessary, set note balance data, but ideally input sales and purchases (or receivables and payables) simultaneously at the time of shipment (or settlement) to focus on improving the accuracy of inventory and accounting data. In this case, sales lists and AR aging lists will have complete data from around the following month.<\/p>\n<p>Even if the cut-off timing is mid-term, by entering the previous month&#8217;s T\/B B\/S accounts with transfer journal entries and conducting transaction entries from the current month, the system automatically transfers cumulative profits to retained earnings during the year-end closing process.<\/p>\n<p>This is because the retained earnings, which is a net asset account at the end of the previous month, includes the year-to-date cumulative profit, so the P\/L accounts only manage the cumulative from the current month&#8217;s occurrences to the fiscal year-end.<\/p>\n<p>If you want to grasp the cumulative amount of P\/L accounts throughout the year, you need to input the year-to-date P\/L cumulative in addition to the previous month&#8217;s B\/S balance, but in this case, you must subtract the year-to-date cumulative profit included in retained earnings to balance.<\/p>\n<div class=\"graybox\">\n<div class=\"maruno\">\n<ol>\n<li>Input the cumulative P\/L accounts from the beginning of the fiscal year to the previous month with transfer journal entries (unbalanced).<\/li>\n<li>Enter the previous month&#8217;s T\/B B\/S accounts with transfer journal entries but subtract the cumulative profit from retained earnings.<\/li>\n<\/ol><\/div>\n<\/p><\/div>\n<p>If you need a By month for year (monthly transition table) of P\/L and B\/S, you need to input the month-end T\/B balance with transfer journal entries and perform closing processes, repeating this year-to-date, but usually, this is not done to such an extent.<\/p>\n<p>There are four patterns for cutting off an accounting system mid-term.<\/p>\n<ol>\n<li>A method that can output monthly A\/P, A\/R aging, and monthly P\/L and B\/S transition tables throughout the year\n<div class=\"maruck\">\n<ul>\n<li>Beginning of the fiscal year: Import T\/B balances, A\/P, A\/R balances.<\/li>\n<li>Monthly: Import G\/L and A\/P, A\/R occurrences, input A\/P, A\/R settlements, and perform closing processes.<\/li>\n<\/ul><\/div>\n<\/li>\n<li>A method that can output monthly P\/L and B\/S transition tables throughout the year\n<div class=\"maruck\">\n<ul>\n<li>Beginning of the fiscal year: Import T\/B balances.<\/li>\n<li>Monthly: Import G\/L and A\/P, A\/R occurrences, offset A\/P, A\/R settlements that occurred before the previous month from G\/L, input A\/P, A\/R settlements that occurred from the current period, and perform closing processes.<\/li>\n<\/ul><\/div>\n<\/li>\n<li>A method to grasp the profit throughout the year and the monthly P\/L and B\/S transitions from the current month onwards (only balances are needed until the previous month)\n<ul>\n<li>Current month: Enter all accounts of the previous month&#8217;s T\/B with transfer journal entries.<\/li>\n<\/ul>\n<\/li>\n<li>A method to only grasp the profit and monthly P\/L and B\/S transitions from the current month onwards\n<ul>\n<li>Enter only the B\/S accounts of the T\/B with transfer journal entries and transfer the difference to retained earnings to balance.<\/li>\n<\/ul>\n<\/li>\n<\/ol>\n<p>In the accounting system, monthly profits are displayed as Net Profit on the B\/S to balance, but during the year-end closing process, cumulative profits are transferred to retained earnings.<\/p>\n<h2>Corporate Accounting and Balance of Payments<\/h2>\n<p>Corporate accounting and balance of payments share the principle of double-entry bookkeeping, but there is a difference in displaying debits and credits in reverse. This is distinguished by the term &#8220;double-entry recording.&#8221; In the cash flow statement, the relative account amounts of journal entries based on the cash flow code from the G\/L are obtained and displayed in reverse.<\/p>\n<p>In corporate accounting, P\/L is considered from the perspective of profit and loss (asset movement), while the cash flow statement is considered from the perspective of income and expenditure (money movement). For example, the journal entry when sales (revenue) are fully received in cash is as follows:<\/p>\n<div class=\"graybox\">\n<div class=\"maruck\">\n<ul>\n<li>(Debit) Cash 100 (Credit) Sales 100<\/li>\n<\/ul><\/div>\n<\/p><\/div>\n<p>Since P\/L and B\/S are asset-based with the normal balance rule that assets are written on the right and revenues on the left, this cash movement journal entry is reflected in the cash flow statement.<\/p>\n<p> <img decoding=\"async\" alt=\"Corporate Accounting and Balance of Payments\" class=\"alignleft wp-image-19450 size-full\" height=\"300\" src=\"https:\/\/bahtera.jp\/wp-content\/uploads\/cs1-287x300-1.jpg\" width=\"287\" srcset=\"https:\/\/bahtera.jp\/wp-content\/uploads\/cs1-287x300-1.jpg 287w, https:\/\/bahtera.jp\/wp-content\/uploads\/cs1-287x300-1-205x214.jpg 205w, https:\/\/bahtera.jp\/wp-content\/uploads\/cs1-287x300-1-249x260.jpg 249w\" sizes=\"(max-width: 287px) 100vw, 287px\" \/> <\/p>\n<p>In the direct method, based on the cash flow code of the G\/L, the offset of cash and bank accounts is applied to the details of IN and OUT in operating activities, investing activities, and financing activities. On the other hand, the indirect method is created to show how much of the profit and loss raised on the P\/L has resulted in income and expenditure in the operating activities section.<\/p>\n<p>For investing and financing activities, the offset of liabilities, capital, and assets is basically cash and bank, so it is the same as the direct method cash flow statement.<\/p>\n<p>The journal entries for the balance of payments are created in the same way as corporate accounting, from the perspective of the cash and bank accounts in the G\/L.<\/p>\n<div class=\"graybox\">\n<p class=\"field-note\" style=\"clear:both;width:100%;box-sizing:border-box;margin:18px 0 8px;padding:14px 16px 14px 18px;background:#fffaf3;border:1px solid #f0e0c8;border-left:5px solid #d97706;border-radius:6px;color:#3f3a32;line-height:1.75;\"><strong style=\"display:inline-block;margin-right:0.35em;color:#b45309;font-weight:700;\">Case:<\/strong> Export<\/p>\n<div class=\"maruck\">\n<ul>\n<li>(Debit) Cash (Increase in financial assets) (Credit) Export (Income)<\/li>\n<li>&#x27a1; Conventionally written in reverse<\/li>\n<li>(Credit) Export (Income) (Debit) Cash (Increase in financial assets)<\/li>\n<\/ul><\/div>\n<\/p><\/div>\n<div class=\"graybox\">\n<p class=\"field-note\" style=\"clear:both;width:100%;box-sizing:border-box;margin:18px 0 8px;padding:14px 16px 14px 18px;background:#fffaf3;border:1px solid #f0e0c8;border-left:5px solid #d97706;border-radius:6px;color:#3f3a32;line-height:1.75;\"><strong style=\"display:inline-block;margin-right:0.35em;color:#b45309;font-weight:700;\">Case:<\/strong> Import<\/p>\n<div class=\"maruck\">\n<ul>\n<li>(Debit) Import (Expenditure) (Credit) Cash (Decrease in financial assets)<\/li>\n<li>&#x27a1; Conventionally written in reverse<\/li>\n<li>(Credit) Cash (Decrease in financial assets) (Debit) Import (Expenditure)<\/li>\n<\/ul><\/div>\n<\/p><\/div>\n<p>For trade service balance (current account) surplus, a corresponding financial account surplus always occurs, and since the financial account is almost the same amount in debit and credit, the following equation roughly holds. In other words, if the current account is in surplus, the financial account is in deficit, but a financial account deficit indicates a high level of overseas assets.<\/p>\n<div class=\"graybox\">\n<div class=\"maruck\">\n<ul>\n<li>Current account &#8211; Financial account = 0<\/li>\n<\/ul><\/div>\n<\/p><\/div>\n<p>Just as current period profits are incorporated into retained earnings, the current account converges into the financial account. For a central bank (BI) with a current account deficit and low foreign currency reserves, the exchange rate defense measure is to encourage foreign capital inflow with exceptionally high interest rates (7.5% as of May 2015), but the government wants to lower interest rates to stimulate the domestic economy.<\/p>\n<p>In May 2015, we have become accustomed to 1 USD = Rp13,000, but the psychological defense line of the rupiah has continued to retreat from Rp.9,000 to Rp.10,000 to Rp.12,000. The root cause is the current account deficit, or more specifically, the inability to generate value-added domestically to meet domestic demand. When export items are primarily primary products (natural rubber and palm oil), the value-added is small, and they are susceptible to the economic demand of the importing countries as they are market commodities.<\/p>\n<p>Since there is a growth engine in domestic demand, the orthodox path for economic growth in developing countries is to satisfy domestic demand by creating value-added domestically, reducing imports, and preventing the outflow of financial assets. The role of Japanese manufacturers in improving the current account and revitalizing domestic investment is significant, and their contribution to boosting Indonesia&#8217;s GDP is expected.<\/p>\n<p>When the domestic economy in Indonesia improves, import pressure increases, and the current account turns negative, but this is inevitable. However, if the domestic financial market volume is thin and interest rates are high, private borrowing demand is weak, and reliance on foreign capital increases, the pattern needs to be improved. Otherwise, public investment from the government will increase, and capital will become concentrated. It is puzzling that regulations hindering foreign capital inflow emerge, but the reduction of corporate tax from 25% to 18% is noteworthy.<\/p>\n<h2>Frequently Asked Questions | Accounting Systems and Retained Earnings<\/h2>\n<p>Based on the content of this article, here are concise answers to frequently asked questions.<\/p>\n<h3>What is a cut-off?<\/h3>\n<p>A cut-off is the process of resetting the accounting system and carrying over past data when restarting. When performed at the beginning of the fiscal year, it involves completing unshipped or unsettled data and resetting inventory and accounting impact factors. This allows for the re-entry of the previous fiscal year&#8217;s ending inventory balance and trial balance B\/S accounts.<\/p>\n<h3>How is the handling of retained earnings conducted?<\/h3>\n<p>The handling of retained earnings is conducted by automatically transferring cumulative profits to retained earnings during the year-end closing process. This is because the retained earnings, which is a net asset account at the end of the previous month, includes the cumulative profit from the beginning of the fiscal year. The P\/L accounts only manage the cumulative from the current month&#8217;s occurrences to the fiscal year-end.<\/p>\n<h3>What is the difference between corporate accounting and balance of payments?<\/h3>\n<p>Corporate accounting and balance of payments share the principle of double-entry bookkeeping, but there is a difference in displaying debits and credits in reverse. In corporate accounting, profit and loss calculations are based on asset movements, while the cash flow statement considers income and expenditure movements. The journal entries for the balance of payments are created similarly, from the perspective of the cash and bank accounts in the G\/L.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Transferring current period profits to retained earnings zeroes out P\/L account balances. The system cut-off is typically performed at the fiscal year-end\u2026<\/p>\n","protected":false},"author":2,"featured_media":104677,"parent":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[683],"tags":[],"class_list":["post-57143","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-indonesia-accounting-tax-rule"],"_links":{"self":[{"href":"https:\/\/bahtera.jp\/en\/wp-json\/wp\/v2\/posts\/57143","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bahtera.jp\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bahtera.jp\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bahtera.jp\/en\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/bahtera.jp\/en\/wp-json\/wp\/v2\/comments?post=57143"}],"version-history":[{"count":2,"href":"https:\/\/bahtera.jp\/en\/wp-json\/wp\/v2\/posts\/57143\/revisions"}],"predecessor-version":[{"id":103897,"href":"https:\/\/bahtera.jp\/en\/wp-json\/wp\/v2\/posts\/57143\/revisions\/103897"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bahtera.jp\/en\/wp-json\/wp\/v2\/media\/104677"}],"wp:attachment":[{"href":"https:\/\/bahtera.jp\/en\/wp-json\/wp\/v2\/media?parent=57143"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bahtera.jp\/en\/wp-json\/wp\/v2\/categories?post=57143"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bahtera.jp\/en\/wp-json\/wp\/v2\/tags?post=57143"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}