purpose of any economic activity is retained earnings.It is quite natural, because it means an increase in the availability of equity of the company that allows you to make more and larger transactions and, consequently, leads to an increase in revenues in the future.
Retained earnings - a profit that has not been paid in the form of dividends and is reflected in the account 84 "Retained earnings".
balance on this account, as well as on any other, can be negative and positive - it all depends on income from debit and credit of the account.
loan reflects the net profit of the enterprise, and debit - dividends, these two articles in the ground and affect the way some will be retained earnings.This, however, does not mean that it is an asset to the company and its accumulation rather suggests that the resulting profitable activity funds were reinvested in production.
Consider an example in which the company in 2012 earned 500 thousand. Rub., Has paid dividend of 300 thousand. Rub.and invest in the production of 200 thousand. rub.Assume that 400 thousand. Rub.- A previous annual retained earnings, it allows us to draw up a report on the allocation of net income for the year 2012.
No need to be a great mathematician to understand that the retained earnings of the reporting year was thus 400 thousand. Rub.In the following meeting of the shareholders can choose yourself how to dispose of it for the benefit of the enterprise.
| Retained earnings at the beginning of 2011 | 400,000 |
| Net profit | 500,000 |
| Subtotal | 900,000 |
| Dividends | 300,000 |
| Reinvestment | 200,000 |
| Balanceretained earnings at the end of 2012 | 400,000 |
As can be seen from the calculation, 400 ths. rub.- This is a positive for the account 84 "Retained earnings" at the end of 2012.This suggests that the assets of the company as a whole increased, but their proportion to the increase of certain types of remains in question.The negative balance on the account usually happens when the company's losses and dividend payments exceed income from operating activities.In this case, the Shareholders' Meeting usually makes the decision to reduce the share capital in order to overcome the deficit.The negative balance of this account is called a debit balance, as positive - a credit, since the 84th through in its essence is an active-passive.
Please note that all postings to the account 84 associated with the distribution of profits by the founders and members of the organization.In fact, the undistributed profits of the enterprise - is the balance of the account at the beginning or end of a certain period.On account 99 "Gains and losses" amount of profit is deducted in the 84th through to the end and at the beginning of a time.The resulting net income is allocated to the payment of dividends, improving production conditions, the reserve fund and to eliminate the losses of previous years.
