Glossary
Retained earnings
Retained earnings are the total profits that have stayed in the business since it began, after what the owner drew or paid out.
What it means for a shop owner
They appear within equity on the balance sheet. They grow with profit and shrink with losses and drawings. They are not necessarily cash, since they may have been spent on stock and equipment.
A worked example
At the start of the year they stand at 4000. The year earns 1500 and the owner draws 500, so retained earnings end the year at 5000.
Related
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The free plan: the whole shop for one branch, an offline cashier with stock, debts and accounting, with a daily limit on invoices, expenses and purchase orders. What it includes