The normal balance in the retained earnings account is a credit. This balance signifies that a business has generated an aggregate profit over ...ServicesPricingForAccountantsSeptember09,2019Home  ➞  Blog  ➞  Whatisretainedearningsnormalbalance?Whatisretainedearningsnormalbalance?Foranycommercialorganization,themaingoalistomaximizeprofitfromtheiractivities.Forthisreason,ownersarealwaysinterestedinthevalueoftheretainedearnings.Retainedearningsareaninevitablepartofeverybusiness.Thesearethemeansthatthecompanycandistributebetweenthefoundersorsaveontheaccountsofthecompanyforitssubsequentdevelopment.Thisremainingprofitisessentialforanycompany,therefore,inthisarticlewewilldiscusshowitisreflectedinthebalancesheetandwhatarethenuancesassociatedwithit,includingitsnormalbalanceandwhatmakesretainedearningsgoupanddown.Afterall,companymanagersshouldbeawareofwhatisincludedinretainedearningsandhowtheyarerecorded,althoughthisismorelikelytoberelatedtotheworkofanaccountant.Butitisthislineinthebalancesheetthathasasignificantinfluenceonthedevelopmentofthecompany,helpsittomoveforward.Retainedearningsareanideallong-termsourceofbusinessfinancing.ThenormalbalanceofretainedearningsThenormalbalanceintheretainedearningsaccountisacredit.Thisbalancesignifiesthatabusinesshasgeneratedanaggregateprofitoveritslife.However,theamountoftheretainedearningsbalancecouldberelativelylowevenforafinanciallyhealthycompany,sincedividendsarepaidoutfromthisaccount.Consequently,theamountofthecreditbalancedoesnotnecessarilyindicatetherelativesuccessofabusiness.Whenthebalanceintheretainedearningsaccountisnegative,thisindicatesthatabusinesshasgeneratedanaggregatelossoveritslife.Thisisespeciallycommonduringthestartupyearsofabusiness,whenitmayincursustainedlossesbeforetheentityhasaccumulatedenoughcustomersandreleasedenoughproductstoensureitselfofareasonableprofit.WhatareRetainedEarnings?Retainedmeanstokeepandearningsmeanincome,thusretainedearningsisthepercentageoramountofnetincomethatwasnotpaidintheformofdividendsbutwas