When I first started studying financial statements I thought retained earnings actually held cash. But the way I understand it now is, retained earnings is just a way of ‘keeping score’ of the historical amount of earnings the corporation has kept since it’s founding. Am i on the right track?? Thanks in advance!
Hello! Im from Philippines and your videos really help a lot. Im currently reviewing for my CPA exam in October 2016. Can I have a request? Can you also make a video explaining/summarizing all transactions that affect Retained Earnings? In Auditing Problems this help me a lot 😄🙏❤️. Thank you sir! Godbless 😄
Hey ... thank you so much for this video, it really helps. I will tell my friends about it. Can I ask though? What is your specialty? Financial Reporting/Accounting or Management Accounting????
Revenue - expenses = net income, not goods. Let's take a simple example. Lets say you sold 10 pairs of shoes for $20 each. It cost you $15 to produce the shoes. The revenue you received is $200 ($20 x 10 pairs of shoes). Your expense, or cost to make the shoes is $150 ( $15 x 10 pairs of shoes). Thus, your net income would be $50 ($200 - $150), which would go into retained earnings at the end of the year. The cash account is on the balance sheet (This is not the same thing as retained earnings). Think of cash as the balance in your bank account. At the end of the year, the cash account isn't zeroed out because it is a permanent account. Unlike retained earnings, which is a temporary account.
![Kumamoto Masters Japan 2024 | Gregoria Mariska Tunjung (INA) [5] vs. Akane Yamaguchi (JPN) [2] | F](http://i.ytimg.com/vi/EIjZybhsWqA/mqdefault.jpg)
Got it, will never forget throughout my whole life
😀
I use to think financial accounts is complicated but now I see how easy it is
A big help with this simple explanation. Thanks so much!
Glad it was helpful!
Thank you for your easy-to-understand explaination.
When I first started studying financial statements I thought retained earnings actually held cash. But the way I understand it now is, retained earnings is just a way of ‘keeping score’ of the historical amount of earnings the corporation has kept since it’s founding. Am i on the right track?? Thanks in advance!
Its actual cash in the BANK
(Maybe)
precise n clear explanation
thanks for this explanation
Hello! Im from Philippines and your videos really help a lot. Im currently reviewing for my CPA exam in October 2016. Can I have a request? Can you also make a video explaining/summarizing all transactions that affect Retained Earnings? In Auditing Problems this help me a lot 😄🙏❤️. Thank you sir! Godbless 😄
Thank you for the kind words. I will try to make a video on the topic you mentioned as soon as possible. I hope you do very well on the CPA exam!
Warren Buffet is always talking about retained earnings. Opportunity favors those who are sitting on cash to capitalize on them when they come and go.
Thanks for this explanation, it was very clear
Glad it was helpful!
Wow. Thank you so much for the good explanation.
Hey ... thank you so much for this video, it really helps. I will tell my friends about it. Can I ask though? What is your specialty? Financial Reporting/Accounting or Management Accounting????
NewVisionz I'm glad you found the video helpful! I make videos in both subjects but I have the most extensive training in Financial Accounting.
What’s the Difference between retained earnings and free cash flow?
GOOD EXPLANATION!
How does a cumulative effect apply to retained earnings?
So if retained earnings are accumilated, then why does the account close off to Profit and loss?
I’m confused - so when sell goods we receive cash .. and then sale-goods= net and that goes into retained earning .. so we have double cash ???
Revenue - expenses = net income, not goods. Let's take a simple example. Lets say you sold 10 pairs of shoes for $20 each. It cost you $15 to produce the shoes. The revenue you received is $200 ($20 x 10 pairs of shoes). Your expense, or cost to make the shoes is $150 ( $15 x 10 pairs of shoes). Thus, your net income would be $50 ($200 - $150), which would go into retained earnings at the end of the year. The cash account is on the balance sheet (This is not the same thing as retained earnings). Think of cash as the balance in your bank account. At the end of the year, the cash account isn't zeroed out because it is a permanent account. Unlike retained earnings, which is a temporary account.
@Edspira
I have a doubt too😢
Well explained!!!