In the accounting of an enterprise, the undistributed profit at the beginning of the period refers to the net profit remaining after the distribution of profits in the previous fiscal year. These net profits can be set aside for redistribution in the next fiscal year, or they can be used as reserve funds for the expansion of reproduction and other purposes. Therefore, the calculation of undistributed profit at the beginning of the period needs to take into account the profit distribution of the previous year.
First of all, we need to understand what profit distribution is. Profit distribution refers to the act of distributing the realized profits to shareholders, investors or employees in accordance with the provisions of the national tax law and the articles of association of the enterprise.
Normally, profit distribution consists of the following 4 aspects:
1.Withdrawal of statutory surplus provident fund: According to the provisions of the Company Law, the statutory surplus reserve fund shall be withdrawn at the rate of 10% of the net profit of the shares*** every year;A limited liability company shall withdraw 5%-10% of its net profit annually from the statutory surplus provident fund.
2.Withdraw any provident fund: The company can decide whether to withdraw any provident fund according to its own operating conditions and profit level, which is generally 10%-20% of the net profit.
3.Distribution of dividends or bonuses to investors: According to the provisions of the Company Law, listed companies shall distribute cash dividends or dividends to shareholders within 10 working days after the realization of net profits, and include them in the item of "cash paid to and for employees" in the current income statement. The method and proportion of profit distribution of non-listed companies shall be determined by the company itself.
4.Other capital reserves: The company can also withdraw other capital reserves from net profits, such as increasing registered capital from net profits, and converting surplus reserves from net profits to increase paid-in capital.
Next, let's take a simple example to illustrate how to calculate the opening undistributed profit. Suppose a company achieved a net profit of 1 million yuan in the previous year, of which 200,000 yuan (i.e. 10%) was withdrawn from the statutory surplus reserve fund, 50,000 yuan (i.e. 10%) was withdrawn from the discretionary reserve fund, and 100,000 yuan of cash dividends were distributed to investors, then the company's undistributed profit at the beginning of the period was:
Undistributed profit at the beginning of the period = net profit of the previous year - Statutory surplus reserve fund withdrawn - Discretionary provident fund withdrawn - Dividend amount
= $1,000,000 - $200,000 - $50,000 - $100,000
750,000 yuan. Therefore, the company still had 750,000 yuan of undistributed profits at the beginning of the year. Of course, this number is not set in stone, and it may change with the subsequent distribution of profits of the enterprise.