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What is the difference between the terms “earnings and profits” and “retained earnings”?
Solution
Earnings and profits indicates the current year profit earned from the operations while retained
earnings indicate the profits of previous year adjusted with dividends and other distributions
made to stockholders from the profits earned till date. Retained earnings is part of the capital of
the busienss which increases when the company earns profits and decreases when have losses or
pay out dividend

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What is the difference between the terms “earnings and profits” and .pdf

  • 1. What is the difference between the terms “earnings and profits” and “retained earnings”? Solution Earnings and profits indicates the current year profit earned from the operations while retained earnings indicate the profits of previous year adjusted with dividends and other distributions made to stockholders from the profits earned till date. Retained earnings is part of the capital of the busienss which increases when the company earns profits and decreases when have losses or pay out dividend