There are several methods to do this depending on what kind of audit trail you want.All income and expense amounts need to be closed to the capital accounts at year end. Go into the previous year and do general journals to close these accounts. This will zero out your net income/retained earnings. Then you can update your starting balances in the New Year.
Or in the current year, you can select Accounts | Equity Name Changes and change the net income amount to 0. Then manually update the starting balances for your capital accounts.
See the post Prior year net income and the post Year End partnership distribution for additional information.
[This message has been edited by Pamela (edited 06-27-2002).]