Understanding Profit Detained

Posted by Imam Larh on Saturday, 12 May 2018

Understanding Profit Detained
Weaccounting - This article will discuss retained earnings as complete as retained earnings, factors affecting retained earnings, retained earnings benefits in accounting.

Understanding Profit in Hold

In accounting, my friend must often hear the term retained earnings. Understanding retained earnings are:

Retained earnings are profits derived from the enterprise in whole or in part, such profits retained or not provided to shareholders in dividends.

Money from the profits will usually be reinvested to the company to become a major lance in the continuity of the company's business growth as well as to pay the debts of the company.

The retained earnings in the balance sheet report will be in Liabilities position. The decision to share whether or not retained earnings is regulated in the General Meeting of Shareholders (GMS).

Retained earnings usually exist in limited liability companies
, usefulness in knowing the amount of retained earnings in a company is to know the company's growth performance from year to year.

The purpose of retained earnings is to pay off the company's debt and reinvestment in the company's business activities.

Factors Affecting the Gain on Hold

Below are the factors that affect the amount of retained earnings in a company are as follows:
  1. Changes in corporate tax
  2. Changes in business strategy within the company
  3. Changes in the cost of goods sold (HPP)
  4. Changes from net receipts
  5. Changes in the amount of money paid to shareholders/investors in the form of dividends
  6. Changes in corporate administrative costs
The benefit of Retained Profit

Below are the benefits of retained earnings in a company are as follows:
  1. To pay off the debts of the company
  2. As one source of cost in finance the company's operations in achieving maximum profit
  3. As a reserve cost to invest to investors
  4. Can be used in growth companies in the future
Thus the above article which discusses the Understanding of Retained Earnings. Hopefully, the article above can add to your knowledge.

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