Retained Earnings - What is the difference between net income and retained earnings?

Q: What is the difference between net income and retained earnings?

Net income is often called the bottom line since it sits at the bottom of the income statement and provides detail on a company's earnings after all expenses have been paid. Any net income that is not paid out to shareholders at the end of a reporting period becomes retained earnings.

Answer

Because it shows how much money a business made after paying all of its expenditures, net income is frequently referred to as the bottom line. It is located at the very bottom of an income statement. At the conclusion of a reporting quarter, retained profits are any net income that remains after paying out to shareholders.

Retained Earnings - What is the difference between net income and retained earnings?

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