Retained Earnings Account still have balance even if the net income from prior year is zero

General Ledger 12.2.8

RDBMS : 12.1.0.2.0

Flexfield structure:

Segment1: RC (balancing segment)

Segment2: Numeric Currency Code

Segment3: Account

Hi,

Client's process is to transfer(zero out) all revenue and expense account during year end to an Undivided Profit Account during ADJ period. This is different from General Ledgers own functionality to zero revenue and expense at the start of year.

Since the net income at end of year is zero, retained earnings account at the start of year is also zero.

However, when we post additional revenue/expense transactions to prior year(DEC Period) then zero it out again at year end(ADJ Period), balance of some additional net income posted during DEC period were being retained in Retained Earnings Account.