Retained Earnings Meaning | Accounting Share

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Retained earnings are accumulated profits and losses retained in a corporation after dividends and relevant adjustments.

Example

Opening retained earnings of 40,000 plus net income of 12,000 less dividends of 3,000 gives closing retained earnings of 49,000.

Remember the difference

Retained earnings are part of equity, not a separate cash reserve. A company may have high retained earnings and little cash.

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Updated 3 November 2026. Examples are simplified for learning. Where a term depends on US law, IFRS, US GAAP or a historical rule, check the context explained above and the requirements relevant to your course.

Study references: OpenStax financial accounting and managerial accounting. For reporting requirements, consult the applicable IFRS Standards or FASB guidance. US tax terms should be checked against the relevant tax-year IRS instructions.

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