QuickBooks adjusts your income and expense accounts at year-end to zero. Your new fiscal year will start with a zero net income.
QuickBooks makes an adjusting entry to your net income. Say your profit for the year was $9,000, you will see this balance in the equity section of your Balance Sheet as net income of $9,000.
QuickBooks increases your Retained Earnings equity account on the first day of the next fiscal year by the previous year's net income ($9,000 in this example) and decreases your net income by the same amount. This way, you start the fiscal year with a net income of zero.
