(Increase in Retained Earnings (v2850.01))
This calculated equity account on the Balance Sheet represents the Net Income (v1750) accumulated over the life of a corporation, less cumulative dividends and adjustments. In history, Retained Earnings (v2850.00) is calculated as Total Assets (v2490) less the sum of all liabilities (v2800) and equities other than Retained Earnings (v2850.00).
In historical periods, this account is calculated as:
(v2490.00) Total Assets
- (v2800.00) Total Liabilities
- (v2780.00) Minority Interest
- (v2820.00) Preferred Stock
- (v2840.00) Common Stock (Net of Treasury)
- (v2870.00) Currency Translation Adjustments
- (v2880.00) Other Equity
= (v2850.00) Retained Earnings
In forecast periods, Retained Earnings (v2850.00) is calculated as:
(v2850.00) Retained Earnings (prior period)
+ (v1750.00) Net Income
- (v1800.00) Preferred Dividends
- (v1900.00) Common Dividends
+ (v3000.00) Funds Flow Adj: Source
- (v3020.00) Funds Flow Adj: Use
= (v2850.00) Retained Earnings
These methods of determining Retained Earnings should yield the same result due to the interrelationships among the Balance Sheet, Funds Flow Statement, and the Income Statement. They may yield different results in historical periods if a transaction that affects equity but does not flow through the Balance Sheet is reflected on the historical financials you are replicating.
If this occurs, a warning message is printed on your reports indicating an out-of-balance condition. You will get this message if the out-of-balance condition in history is due to a data-entry error.