Retained earnings - part of net income remaining after the payment of dividends and intended for reinvestment in the development of production and to pay the debts of the enterprise.This part of the profits are invested in fixed assets of the enterprise.Retained earnings are often stored in a variety of securities or in the form of cash balances and balances on current accounts.It is used to fund capital expenditures, to repay the loans and an increase in volume of liquid assets.Compared with normal mobilization of new capital by issuing shares and borrowing, holding a share of profits is a simpler method of financing the needs of the enterprise.Retained earnings are invested in the acquisition of new businesses or companies, asset acquisition and expansion of trade credit.It is a source of funding for investment in the economy.
amount remaining after deduction of the profits derived by an enterprise of the amounts of taxes and obligatory payments, referred to as "net income."The owners of the company belongs to the full right to dispose of it.It is the main source of income that the owners, and its presence is conducive to attracting additional investment in the company.Retained earnings from previous years, remaining at his disposal after the payment of income goes to increase the equity capital invested in production development.
Retained earnings in the balance sheet is formed over the years and is reflected in the December turnover of the year.At the same time made the following entry:
AT 99 Km 84 "Retained earnings".This posting is writing off profits.
shareholders or the administration of the organization at the general meeting determines the allocation of profits.It uses provisions stipulated in the constituent documents of the company.His decision is recorded in a special report.It was on the basis of this document accounting records an all necessary records.Before making entries accountant should verify the conformity of the decision in the minutes of the distribution of profits set out in the Charter of the organization.This profit goes to:
- repayment of losses;
- authorized capital;
- payment of dividends;
- development of the enterprise;
- capital reserve;
- creation of special funds (social and consumption).
There undistributed earnings before the decision on the distribution of profits in the form of payment of dividends and subject to such a decision.The first is reflected in the reports as net income, and the second is shown in the balance sheet.
part of the profit that has been spent during the reporting period, written off when it was used, and a reformation is given only to that part of that intended for the disposal of the owners.
When the Reformation came on the account 99 "Gains and losses" displays a credit balance (balance).It is attributed to the 84, called the "Retained earnings (loss)."This posting is the last for the year.
To generate more information on ways to profit distribution to the 84 recommended to open the account and sub-account number, which will be detailed this information.System mapping using profit facilitates communication between the parties to the organization during a decision on the amount of revenue that is planned to pay a dividend.
course, retained earnings requires careful consideration, therefore, all its changes are reflected in the financial report, which is made up in such a way:
- first show incoming amount of retained earnings;
- further added to the amount of profit all amounts that were transferred from the funds;
- from the resulting figure is subtracted before amounts transferred to the funds and dividend payments intended for the participants;
- eventually all the calculations we obtain the desired profit at the end of the period.
