The statement of retained earnings is a financial statement prepared by corporations that details changes in the volume of retained earnings over some period. Retained earnings are profits held by a company in reserve in order to invest in future projects rather than distribute as dividends to shareholders.

What is the statement of retained earnings equation?

Retained Earnings = Retained Earnings Beginning Period Balance + Current Period Net Profit (- Current Period Net Loss) – Cash Dividends – Stock Dividends.

Is retained earnings positive or negative?

If the entity operation generates net income, then the accumulation of it is called retained earnings which is a positive balance, and if the entity makes operating losses, then retained earnings will turn negative. It is called accumulated losses. When retained earnings turn negative, total equity is also decreasing.