In accounting, retained earnings refers to the portion of net income of a corporation that is retained by the corporation rather than distributed to shareholders as dividends. Similarly, if the corporation incurs a loss, then that loss reduces the corporation's retained earnings balance. If the balance of the retained earnings account is negative it may be called retained losses, accumulated losses or accumulated deficit, or similar terminology. Retained earnings and losses are cumulative from year to year.
If a company is publicly held, the balance of retained earnings account that is negatively referred to as "accumulated deficit" may appear in the Accountant's Opinion in what is called the "Ongoing Concern" statement located at the end of required SEC financial reporting at the end of each quarter.
Retained earnings are reported in the shareholders' equity section of the corporation's balance sheet. Corporations with net accumulated losses may refer to negative shareholders' equity as positive shareholders' deficit. A report of the movements in retained earnings or losses are presented in the Statement of Retained Earnings or Statement of Retained Losses.
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