Retained Earnings ??


G

Greg Maxey

As the entering argument, I am a bumbling novice and probably dangerous when
it come to bookkeeping.

What do I do with the value (amount) the was posted to the Account "Retained
Earnings" when I closed the year 2008.

As a simplistic example I started a company with $100.00 of my money in a
cash account. Through the year I had $500.00 in expenses and $1000.00 in
sales. I paid myself the $100.00 I started with plus $300.00. All
transactions where recorded in the cash account. At the end of the year the
cash account balance is $200.00. When I closed the year the sum $200.00 was
added to "Retained Earnings." I don't see where it was added from and I
don't know what to do to make it go away or go back to zero.

Please help. Thanks.
 
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S

Skip in FL

Greg:

The simple answer is: "Nothing".

The Retained Earnings (R/E) account is a balance sheet account and
represents the historical earnings (i.e., tax profits) of a company. Like
other balance sheet accounts (e.g., long-term notes payable, shareholder
equity, etc.), the R/E account stays on the books and is not zeroed out at
year end like the income statement accounts (e.g., sales and expenses) are.

I hope this helps.
 
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G

Greg Maxey

Skip,

It certainly didn't hurt ;-). Thanks.

Greg:

The simple answer is: "Nothing".

The Retained Earnings (R/E) account is a balance sheet account and
represents the historical earnings (i.e., tax profits) of a company.
Like other balance sheet accounts (e.g., long-term notes payable,
shareholder equity, etc.), the R/E account stays on the books and is
not zeroed out at year end like the income statement accounts (e.g.,
sales and expenses) are.

I hope this helps.
 

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