Bookkeeping

Retained earnings

Retained earnings are the cumulative net income a corporation has kept in the business after paying dividends and making other equity adjustments. They are reported in the equity section of the balance sheet.

Reviewed November 3, 2026

Why it matters

Retained earnings connect the profit and loss to the balance sheet. A negative balance, or a balance that changes without income or distributions, needs an explanation.

Example

A corporation earns $100,000 over several years, pays $30,000 in dividends and keeps $70,000. The retained earnings balance is $70,000 before other adjustments.

Related terms

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Sources

Checked November 3, 2026. Public pages and tax rules change; confirm them before relying on them.

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