davidharrisoncga at gmail.com
Tue Nov 22 18:41:48 EST 2005
On 22/11/05, Doctorcam <cam at ellisonet.ca> wrote:
> This shows up as a calculated amount in the Balance Sheet report.
> Where does it come from? I notice that the Retained Earnings figure
> for the last fiscal year is the sum of the RE and the Net Profit for
> the previous year, which was the first year of operation.
The short answer is retained earnings is the accumulated earnings of
the company since it's inception. Here's an example:
Year 1 - Net income of $1,000
- Retained earnings at the end of the year = 0 + $1,000
Year 2 - Net loss of $100
- Retained earnings at the end of the year = $1,000 - $100 = $900
Year 3 - Net income of $200
- Retained earnings at the end of the year = $900 + $200 = $1,100
and so on.
> My accountant is wondering, and I'm confused.
I'd be worried if your accountant doesn't know what retained earnings are!!
David Harrison, BAccS, CGA
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