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profits More specifically, profits that are not distributed to shareholders as dividends are maintained in the retained earnings section of the equity section of the balance sheet. For tax purposes, since dividends are after tax on the company and then taxed again on receipt by the sghareholder, the company must show a compelling business reason to keep them instead of distributing them. This is generally not too difficult to do.
Wiki User
∙ 17y ago
Wiki User
∙ 16y agoBasically, Net income from the year, is one cause, and perhaps a positive adjustment of net income (from say the prior period) to be added to the beginning balance in the Retained Earnings account. Hope that helps.
Wiki User
∙ 15y agoProfit for the period increases Retained earnings.
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Will a net income of 95000 increase or decrease retained earnings?
Since increases in retained earnings mostly come from income accumulation, a net income of $95,000 will increase retained earnings.
What causes retained earnings in a company to decrease?
Retained Earnings is decreased by a loss for the year or dividends paid to stockholders.
What is the journal entry to increase retained earnings?
To increase RE, depending on the account (e.g. Depreciation - Depr.) that caused or lead to the need to increase RE, you DEBIT Retained Earnings (RE). RE XXX Depr. XXX
What are the possible causes fo retained earnings?
only PROFIT WHICH IS RETAINED IN THE BUSINESS
What affects stockholders equity?
increase retained earnings
Can you debit asset and credit Retained earnings?
Assets are increased with a debit and decreased by a credit. Retained earnings is a credit, as they are an owners equity account and increase with credit.Retained earnings is what a company has after all expenses and dividends (if applicable) are paid. Retained earnings is shown on the Statement of Retained Earnings and is a credit which increases OE.
Which factors would explain an increase in retained earnings?
INFLATION
Does additional stock increase retained earnings?
Retained earning only increased due to prior year operating profits and that's why it has no effect of any kind of additional capital introduced which directly increase the subscribed or paid up capital and not retained earnings.
How can a company increase equity?
- By generating GAAP earnings and not paying them as dividends - the retained earnings will increase. - By selling and increasing outstanding number of shares - the paid in capital will increase.
What effect do revenues and expenses have on retained earnings?
Revenues Increase and Expense Decreases.
Is this true or false - Treasury stock transactions never increase retained earnings or net income?
true. Treasury stock never affects Net Income. Treasury stock may decrease Retained earnings but it does not increase it.
Is unappropriated retained earnings credit?
Yes, since this account (Retained Earnings) is a credit account and an uppropriate retained earnings account is simply a non-restricted account which is Retained Earnings !!! Even the restricted/ appropriate retained earnings are credited.
