Is a reasonable balance for retained earnings debit or credit? As you have learned earlier in this article, retained earnings are part of the ...SkiptocontentRetainedEarnings:DebitorCreditBalance?Home»Blog»RetainedEarnings:DebitorCreditBalance?HarryVance16.12.202017.12.2020BlogNoCommentsAccountinginoneformoranotherhadexistedforaverylongtimeandappearedaroundthetimewhenpeoplebegantoengageintrade.Accountingisanintegralpartofentrepreneurialactivity.Itisessentialthataccountingismaintainedaccuratelyandontime.Todoso,onemustknowhowtomakeentriestoeachaccount,includingretainedearningsaccount. Inthisarticle,youwillnotonlyfindananswertothequestion“Whatisthenormalbalanceforretainedearnings:debitorcreditbalance?”,butalsogetanoverviewofretainedearnings.Tobetterunderstandthedebitandcreditentries,youwilllearnwhatmakesupthepreservedandwheretheybelongintheaccountingbalance.UnderstandingStockholder’sEquityandRetainedEarningsStockholder’sequityisadifferencebetweentotalassetsandtotalliabilities.Equityindicatorconsistsofthefollowingelements:additionalpaid-incapital(formedasaresultoftherevaluationofassets,sharepremiums,etc.);authorizedcapital(paid-incapital);reservecapital(reservefund,whichiscreatedfromnetprofitandsoon);retainedearnings(formduetotheefficientoperationoftheenterprise,remainatthedisposal).Ownerscandirectnetincometowards:paymentofdividends;increaseofreservecapitalandretainedearnings;repaymentoflosses;otherpurposesbasedonthedecisionoftheowners.Incomeissubjecttodistributionbasedonthedecisionofthegeneralmeetingofshareholdersinajoint-stockcompany,agatheringofparticipantsinalimitedliabilitycompany.Thecompany’sprofitdistributionpolicyischaracterizedbyanindicatorofthedividendpayoutratio,whichshowstheshareofnetprofitintendedfordividendpaymentstostockholders.Thehigherthisindicator,thelowerthegrowthrateofequity,thesmallertheabilitytochannelfundsintodevelopingbusinessactivities,andthelessretainedearningsacompanyhas. Retainedearningsareanintegralpartofequity.Retainedearningsareatotalofall