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Account 120 explanations
Account 120 – Profit for the financial year (profit) shows the company's net profit at the end of the financial year. It is a sub-account of account 12 – Profit for the financial year. The latter can be subdivided into several accounts, to improve management:
Account 120 – Result of the financial year (profit) to record the profit ;
Accounts 121 to 128 can be freely organized, for example for interim management balances;
Account 129 – Result of the financial year (loss) to record the loss .
Rules for Account 120
Account 120 is credited when the company records a profit. The profit recorded in account 120 is the company's net income, i.e. the profit made after deduction of corporate tax . This account is therefore only active once a year.
At the end of the financial year, the balance of account 120 can then:
Be allocated to the profit distribution account (to distribute the profit in the form of dividends or reserves);
Be transferred to the carryforward account (account 119 which allows the balance not to be immediately allocated to another destination).
Account 120 has no impact on the company's cash flow (it is a result).
Examples of operations
Here are several examples to better understand Account 120 – Result of the financial year (profit).
Example 1: Determination of the taxable base
Votre entreprise comptabilise 100 000 € de bénéfice net lors de la clôture de l’exercice. Le compte 120 est crédité de 100 000 €. Ce montant est donc la base de calcul à utiliser pour déterminer votre impôt sur les sociétés.
Exemple 2 : Affectation en réserves et distribution de dividendes
Une entreprise souhaite transférer une partie de son bénéfice net en réserves et d’en distribuer une partie sous forme de dividendes. L’assemblée générale décide d’affecter 30 000 € aux réserves et de distribuer 20 000 € en dividendes. L’enregistrement comptable est :
