What is the retained earnings account?

What is the retained earnings account? What is its purpose? What does it represent? Is it an investment or is it financing?

please explain your answers, thank you

Retained earnings are profits kept buy a company that are not distributed to shareholders. Sometimes if a company has a large profit they will give some to stock holders in the form of dividends, however they arent required to do so, and if they choose not to, then that profit is referred to as retained earnings, and is usually used for future projects for the company.

Retained earnigs are just that. It is profit, which is simply "kept."They look impressive to the shareholders.

Picture the spare 10 dollar bill hidden in your wallet. In a cyclical busines, it might be kept for a downturn, used to pay off debts not yet due, pay for improvements, or,'just held on to until needed."
Consider it money for "internal financing."
It';s there. so you don't have to borrow from the outside.

Good luck.

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