Retained earnings represents cumulative net income stored ; profits acquired by the business.
What is meant by retained earning?
Retained earnings defined as sum of profit a company has left over after paying all its direct expenses , indirect costs, income taxes and its dividends to shareholders. This represents the parts of the company's equity that could be used, for example, to make investment in new equipment, R&D, and marketing.
Is retained earnings an asset?
Retained earnings are a sort of equity and are thereafter reported in the shareholders' equity section of the balance sheet. Although retained earnings aren't themselves an asset, they may be used to buy assets like as inventory, equipment, or other sort of investments.
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