- This topic has 1 reply, 2 voices, and was last updated 10 years ago by
.
- Posts
on the trial balance i have seen retained profits (capital)
however retained earnings?
Also aren’t dividends paid shown deducted from retained earnings
because i swear Ive seen questions with dividends paid on the face of the trail balance?thanks again and sorry for all these questions!
Retained earnings = retained profits (earnings is another word for profits)
Retained earnings are the profits kept in the business – i.e. profits less dividends.
On the Statement of financial position, we simply show the retained earnings. On the Statement of changes in equity we show how the retained earnings figure is arrived at – it is the opening retained earnings plus the profit for the year less the dividends paid.Dividends will certainly appear in the trial balance. When they are paid the bookkeeping will credit cash and debit dividends.
However when preparing the Statement of financial position, only the balance on retained earnings actually appears.
- You must be logged in to reply to this topic.