What is the Normal Balance in the Retained Earnings Account? The normal balance in a profitable corporation's Retained Earnings account is a credit balance.Whatisretainedearnings?DefinitionofRetainedEarningsRetainedearningsisthecumulativeamountofearningssincethecorporationwasformedminusthecumulativeamountofdividendsthatweredeclared.Retainedearningsisthecorporation'spastearningsthathavenotbeendistributedasdividendstoitsstockholders.AreRetainedEarningsanAsset?Theamountofacorporation'sretainedearningsisreportedasaseparatelinewithinthestockholders'equitysectionofthebalancesheet.However,thepastearningsthathavenotbeendistributedasdividendstothestockholderswilllikelybereinvestedinadditionalincome-producingassetsorusedtoreducethecorporation'sliabilities.WheredoRetainedEarningsComeFrom?Attheendofanaccountingyear,thebalancesinacorporation'srevenue,gain,expense,andlossaccountsareusedtocomputetheyear'snetincome.ThoseaccountbalancesarethentransferredtotheRetainedEarningsaccount.Whentheyear'srevenuesandgainsexceedtheexpensesandlosses,thecorporationwillhaveapositivenetincomewhichcausesthebalanceintheRetainedEarningsaccounttoincrease.(Ifthecorporation'srevenuesandgainsfortheyeararelessthantheexpensesandlosses,theresultisanetlossthatreducesthenormalcreditbalanceintheRetainedEarningsaccount.)ThebalanceintheRetainedEarningsaccountisalsodecreasedwhenthecorporationdeclaresacashdividend.WhatistheNormalBalanceintheRetainedEarningsAccount?Thenormalbalanceinaprofitablecorporation'sRetainedEarningsaccountisacreditbalance.Thisislogicalsincetherevenueaccountshavecreditbalancesandexpenseaccountshavedebitbalances.IfthebalanceintheRetainedEarningsaccounthasadebitbalance,thisnegativeamountofretainedearningsmaybedescribedasdeficitoraccumulateddeficit.FreeFinancialStatementsCheatSheet476,618SubscribersYouarealreadysubscribed.Thisofferisnotavailabletoexistingsubscribers.Error:Youhaveunsubscribedfromthislist.Step2:Pleasecheckyouremail.RelatedQuestionsWhatis"deficit"appearinginstockholders'equity?Arere