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Accounting & Tax vocabulary · Assets, Liabilities & Equity

Retained earnings

Meaning in accounting & tax, with examples

nounCommon term

In accounting & tax, retained earnings means: The total profits a company has kept over the years instead of paying them out to shareholders as dividends. They form part of equity.

In Turkish: geçmiş yıllar karları, dağıtılmamış karlar

How it is used

Shown in the equity section of the balance sheet. Net income increases retained earnings, while dividends and losses reduce them. Accumulated losses appear as negative retained earnings.

Example sentences

  1. The board decided to keep this year's profit in retained earnings to finance the new plant.

  2. Retained earnings turned negative after three years of losses.

Common collocations

  • retained earnings balance
  • accumulated losses
  • statement of retained earnings
  • transfer to retained earnings
  • equityThe owners' share in a business: what remains when all liabilities are subtracted from the assets. It includes paid-in capital and retained earnings.
  • net incomeThe profit left after all expenses, interest and taxes have been deducted from revenue for a period. If the result is negative, it is a net loss.
  • dividendA part of a company's profit that is paid out to its shareholders, usually in cash and in proportion to the shares they own.
  • balance sheetA financial statement that shows what a company owns (assets), what it owes (liabilities) and the owners' share (equity) on a specific date.

More terms: Assets, Liabilities & Equity

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This page explains English vocabulary for learners. It is not financial advice.