Hi, Can someone please explain how the retained earnings are calculated in the trial balance? Thanks!
Hi, This sounds quite a general question, and doesn't seem to relate to any specific past paper question or course question. In general, the trial balance will give the accumulation of all the previous retained earnings that the company has made in the past, up to the start of the financial year. To complete the balance sheet (SFP) as at the end of the year we need to add the retained earnings for the financial year in question. Retained earnings will be the total profit after tax less any dividends that were paid during the year. Hope this helps.
Retained earnings aren't "calculated" in the trial balance (the trial balance is simply a snapshot of accounting info). The accumulated past profits which have been retained (rather than paid out as dividend) are "shown" in the trial balance.
