Retained Earnings definitions Flashcards
Retained Earnings definitions
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Retained Earnings
Portion of net income from prior periods not distributed as dividends, often reinvested in business assets rather than held as cash. Net Income
Amount remaining after all expenses are subtracted from total revenues, increasing equity accounts such as retained earnings. Dividends
Distributions of profits to shareholders, reducing the balance of retained earnings when declared. T-Account
Visual representation of an account showing increases on one side and decreases on the other, used for tracking balances. Base Formula
Equation: beginning balance plus additions minus subtractions equals ending balance, used to track account changes. Beginning Balance
Amount present in an account at the start of a period, serving as the foundation for further calculations. Ending Balance
Final amount in an account after all additions and subtractions for a period have been accounted for. Retained Deficit
Negative balance in retained earnings, often resulting from accumulated losses or excessive dividend payments. Equity
Ownership interest in a company, increased by net income and decreased by losses or distributions like dividends. Credit Balance
Positive amount on the right side of an account, typical for equity accounts such as retained earnings. Debit Balance
Negative amount on the left side of an account, indicating reductions in equity or assets. Additions
Increases to an account, such as current period net income added to retained earnings. Subtractions
Decreases to an account, including dividends and net losses deducted from retained earnings. Assets
Resources owned by a company, which may be purchased using retained earnings rather than holding cash. Net Loss
Situation where expenses exceed revenues, resulting in a decrease to retained earnings.
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