surplus of income compared to expenses, total of accumulated profits, surplus money
In
accounting, retained earnings refers to the portion of
net income which is retained by the corporation rather than distributed to its owners. Similarly, if the corporation makes a loss, then that loss is retained. Retained earnings are cumulative from year to year.Retained earnings are reported in the
Shareholders' equity section of the
balance sheet. A complete report of the retained earnings or retained losses is presented in the
Statement of retained earnings or Statement of retained losses.When assets are greater than liabilities, you have a positive equity (positive
book value). When liabilities are greater than assets, you have a negative stockholders' equity—also sometimes called stockholders' deficit. Stockholders' deficit does not mean that stockholders owe money—they may safely go away from such a company. It just means that the value of the assets of the company will have to rise above its liabilities before the stockholders will reap any value (above zero) from owning the company's stock.
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The portion of after-tax net income of a corporation not paid out to shareholders in the form of dividends, but which instead is retained for use in the business.