Retained Earnings & Owner's Equity Explained

Рет қаралды 4,493

2 жыл бұрын

What are retained earnings in a business and how do they affect owner's equity? TGG Founder & CEO, Matt Garrett explains an easy way to think of retained earnings and how you can use your equity to work for you. #retainedearnings #equity #smallbusiness #accounting
Learn more at www.tgg-accounting.com

Пікірлер: 15

@cassconner6023 2 ай бұрын

These are the type of explanations that students need. Teachers tend to be more abstract instead of keeping it simple like you just did. Thanks!

@TGGAccountingSanDiego 2 ай бұрын

Glad to hear this was helpful! We agree - KISS Method! "Keep It Simple, Stupid" hahah

@mayarobles3593 16 күн бұрын

This is EXTREMELY helpful!! Will refer back to this and possibly send to clients :)

@TGGAccountingSanDiego 14 күн бұрын

Glad to help!

@raelee2489 19 күн бұрын

My goodness thank you!

@TGGAccountingSanDiego 17 күн бұрын

happy to help!

@raymondwong336 Ай бұрын

Need a simple example with numbers, please!

@HannahClancy12349 Ай бұрын

If company A within the group is selling company B , but wants to transfer the retained earnings of company B (being sold) to company A , is this possible and how is it valued at point of sale?

@FlyBushLive Жыл бұрын

So the retained earnings is money that’s just sitting waiting to be used for whatever the company Chooses in the future ? Or does it represent money that has been Spent already on purchasing more assets or reducing liabilities?

@TGGAccountingSanDiego 5 ай бұрын

Retained earnings are profits accumulated over time that haven't been distributed to shareholders as dividends. They can be used for various purposes, including investing in assets, reducing liabilities, or funding future growth initiatives. So, it can represent both money awaiting allocation for future use and funds already reinvested in the company's operations.

@briceking669 Жыл бұрын

Can you use retained earnings to pay back the owners initial equity investment? (paying the corporate tax rate on sales first of course).

@TGGAccountingSanDiego Жыл бұрын

Assuming you are in a pass-through entity (S-Corp, LLC, partnership), the answer is yes. You can take a distribution. The distribution is a return of capital to the owners and should not be taxed under most circumstances.

@josejoselete6156 5 ай бұрын

I’m looking at a companys annual return. Retain earnings 500m. Cash, property equipment etc adds up to 200m. Where are the other 300m ? It doesn’t look like as straight straight forward as you painted. Is goodwill or receivables retain earnings, ?

@TGGAccountingSanDiego 5 ай бұрын

Thanks for your comment! Retained earnings represent profits kept by the company instead of being paid out as dividends. The $300 million difference could be due to other assets not included, liabilities, and other equity components. Goodwill and receivables aren't part of retained earnings but can affect total equity. Hope this clarifies things!

@josejoselete6156 4 ай бұрын

Thanks for the reply, but then a company with big retain earnings is not directly to the companies savings then, or it doesn't mean that the company is getting safer.. etc. @@TGGAccountingSanDiego