What does it mean if the retained earnings are negative?

Retained earnings. A negative value indicates that the company has suffered a large loss and is unable to distribute profits during the year.

It is also not possible to convert capital reserve into share capital.

Retained earnings refer to the internal accumulation of enterprises that are withdrawn or formed from the profits realized over the years, including surplus reserves and undistributed profits.

Two categories. Surplus reserve refers to the net profit of the enterprise in accordance with the relevant regulations.

Accumulated funds withdrawn from the program. The surplus reserve of a corporate enterprise includes the statutory surplus reserve.

and arbitrary surplus reserves.

Statutory surplus reserve refers to the surplus reserve withdrawn from the net profit of the enterprise in accordance with the prescribed proportion. Discretionary surplus reserve refers to the surplus reserve withdrawn by the enterprise in accordance with the resolution of the shareholders' meeting or the general meeting of shareholders. The surplus reserve withdrawn by the enterprise can be used to cover losses and increase capital after approval.

or cash dividends or profits, etc.

Undistributed profit refers to the profit of the enterprise after making up for the loss, withdrawing the surplus reserve and distributing the profit to investors, and the profit is retained in the enterprise over the years. Relative to owner's equity.

For the rest of the business, there is greater autonomy over the use of undistributed profits.

Retained earnings refers to the internal accumulation of enterprises extracted or retained in the profits realized by the enterprise from the past years, and it is the net profit realized by the production and operation activities of the enterprise, including the surplus reserve and undistributed profits of the enterprise.

Therefore, a negative retained earnings indicates that the company has suffered a large loss, and it is unable to distribute profits this year, nor can it convert capital reserve into share capital.

Retained earnings refers to the part of the net profit realized by the enterprise over the years, which mainly includes the accumulated surplus reserve and undistributed profits. A negative number of retained earnings indicates that the company is in the red.

The accounting equation of "assets = liabilities and interests of those who are stimulated has equity" determines that the structure of the liability or owner's equity account is the opposite of the structure of the asset account. The general structure of an asset class account is that the debit side of the account records the increase in assets, and the credit side records the decrease in assets. If there is a balance at the end of the period, the balance of the asset class account should be debited.

The general structure of liability accounts and owners' equity accounts is that the credit side of the account records an increase, the debit side records a decrease, and the balance at the end of the period is generally in the cargo side.

The increase in retained earnings refers to the increase in the retained amount of profit in the current year, and the retained profit amount is based on the part of the net profit realized in the current year. The increase in retained earnings showed that the company's self-profitable business activities generated capital accumulation. It has laid a better foundation for the company's development and profit distribution in the future.

1.Also known as undistributed profits. Mausoleum Raid.

2.The cumulative amount of net income retained by a joint-stock company over the years after the payment of taxes and dividends.

3.A component of shareholders' equity.

4.Internal funds for the expansion of reproduction by enterprises**.

5.When the net income from the current period is small or there is a loss, the retained earnings of the previous year can be used to distribute the dividends of Wang Bo Xianxiang.

6.However, once the board of directors has decided on other purposes, it can no longer be used to pay dividends.

7.The Board of Directors also has the power to decide on the direct transfer of a portion of its share capital in accordance with the statutory formalities.

Retained earnings refer to the internal accumulation of enterprises that are withdrawn or formed from the profits realized over the years and retained in the enterprise, including surplus reserves and undistributed profits.

1. Undistributed profit refers to the profit of the net profit realized by the enterprise after making up for the loss, withdrawing the surplus reserve and distributing the profit to investors. Compared with the rest of the owner's equity, the enterprise has greater autonomy over the use of undistributed profits and is less restricted by national laws and regulations.

2. Surplus reserve refers to the accumulated funds withdrawn from the net profit of the enterprise in accordance with the relevant regulations. Surplus reserves include statutory surplus reserves and discretionary surplus reserves.

1) Statutory surplus reserve refers to the surplus reserve withdrawn from the net profit by the enterprise in accordance with the proportion prescribed by law. For example, according to the provisions of the Company Law, a limited liability company and a company with a grace period of shares shall withdraw 10% of the statutory reserve fund according to the net profit, and when the cumulative amount of the statutory surplus reserve reaches more than 50% of the registered capital, it can no longer be withdrawn. If the company's statutory reserve fund is insufficient to make up for the losses of previous years, it shall first use the profits of the current year to make up for the losses before withdrawing the statutory reserve funds.

2) Discretionary surplus reserve refers to the surplus reserve withdrawn from the net profit by the enterprise in accordance with the prescribed proportion with the approval of the general meeting of shareholders or similar institutions. The proportion of the withdrawal of arbitrary surplus reserve shall be determined by the enterprise itself, and the relevant national laws and regulations shall not make it mandatory.

In April 2006, he took the self-study exam "Intermediate Financial and Loss Accounting" and the 13th multiple-choice question.

Among the following items, retained earnings are ( ).

a.Dividends payable that have been declared but not paid.

b.Received capital invested by investors.

c.Statutory surplus reserve drawn from net profit.

d.Appreciation of asset appraisal.

See the answer explainedCorrect Answer:cProofreading Answers:Retained earnings include two parts, one is surplus reserves, and the other is undistributed profits.

The answer C is correct.

Retained earnings refer to the internal accumulation of enterprises that are withdrawn or formed from the profits realized over the years and retained in the enterprise, including surplus reserves and undistributed profits. Retained earnings** refers to the net profit realized by the production and operation activities of the enterprise, including the surplus reserve fund and the undistributed profit of the enterprise, of which the surplus reserve fund is the accumulated surplus for a specific purpose, and the undistributed profit is the accumulated surplus without a specified purpose.

Retained earnings is a historical concept that refers to the accumulation of retained within an enterprise that is extracted or formed from the net profit realized by an enterprise over the years. According to the provisions of the Company Law and the Accounting System for Business Enterprises, when an enterprise distributes after-tax profits in accordance with the articles of association, on the one hand, it withdraws surplus reserves in accordance with the provisions of national laws and retains the profits realized in the current year to form internal accumulation and become a component of retained earnings.

Retained earnings is a kind of distribution of business results under the accounting value distribution theory system, a state of capital possession, which contains a kind of accumulated value, which is in the past tense. The remaining part of the profit or dividend distribution to investors is treated as undistributed profit and left for distribution in subsequent years, and this part also becomes a part of the company's retained earnings.

Retained earnings are used to incur financing costs. Enterprises raise long-term capital from the outside world, and compared with common equity financing, retained earnings financing does not incur financing costs, and the cost of capital is lower. In addition, the distribution of control of the company is maintained, and the retained earnings are used to raise funds, without the need to issue new shares or attract new investors, and the resulting increase in equity capital will not change the company's equity structure and will not dilute the control of the original shareholders.

Retained earnings refer to the internal accumulation of the enterprise that is extracted or formed from the profits realized by the enterprise over the years. It includes surplus reserves and undistributed profits.

Classification of surplus reserves:

Statutory surplus reserve: The statutory surplus reserve of a listed company shall be withdrawn at the rate of 10% of the after-tax profit, and the statutory surplus reserve may not be withdrawn when the cumulative amount of statutory surplus reserve has reached 50% of the registered capital.

Discretionary surplus reserve: Discretionary surplus reserve is mainly withdrawn by listed companies in accordance with the resolution of the general meeting of shareholders.

The difference between statutory surplus reserve and discretionary surplus reserve lies in the different basis for their respective accruals. The former is extracted on the basis of national laws or administrative regulations, while the latter is withdrawn at the discretion of the company.

Uses of surplus reserves:

Clause. 1. Make up for losses. When an enterprise incurs a loss, it should be made up by the enterprise itself. The channel of the loss:

It is made up with the pre-tax profit of the following year. According to the current system, when an enterprise incurs a loss, it can make up for it with the pre-tax profit realized in the next five years, that is, the period for the pre-tax profit to make up for the loss is five years.

It is made up with the after-tax profit of the following year. If the losses incurred by the enterprise are not fully covered after the five-year period, the profits after the income tax shall be applied to the losses that have not been made up.

The surplus reserve is used to cover the loss. When an enterprise uses the surplus reserves withdrawn to make up for its losses, it shall be proposed by the board of directors of the company and approved by the general meeting of shareholders.

Clause. 2. Conversion of capital. When an enterprise converts surplus reserves into capital, it must be approved by a resolution of the general meeting of shareholders.

When the surplus reserve is actually converted into capital, it should be carried forward according to the original shareholding ratio of the shareholders. When the surplus reserve is converted into capital, the amount of the surplus reserve retained after the conversion shall not be less than 25% of the registered capital.

Clause. 3. Distribution of dividends. In principle, if there is no profit in the current year, dividends shall not be distributed, such as in order to maintain the reputation of the enterprise, dividends are distributed with surplus reserves, the following conditions must be met:

1. After making up for the loss with the surplus reserve, there is still a balance in the provident fund.

2. When distributing dividends with surplus reserves, the dividend interest rate should not be too high, and should not exceed 6% of the face value.

3. After the distribution of dividends, the statutory surplus reserve shall not be less than 25% of the registered capital