No, retained earnings are not a current asset for accounting purposes. A current asset is any asset that will provide an economic benefit for or within one year. Retained earnings refer to the amount of net income a company has left after paying dividends to shareholders. Retained earnings are recorded in the shareholder equity section of the balance sheet rather than the asset section, and usually do not consist solely of cash. For these reasons, retained earnings are not a current asset.
Is Retained Earnings a Current Asset? FAQs
No, retained earnings are not considered to be a current asset. Retained earnings are the cumulative profit and losses of a company that has been reinvested into the business rather than being distributed as dividends to shareholders. Retained earnings are reported on the balance sheet under shareholder equity, which is classified as a long-term asset.
A current asset is any asset that will provide an economic benefit for or within one year.
Retained earnings refer to the amount of net income a company has left after paying dividends to shareholders
Retained earnings are recorded in the shareholder equity section of the balance sheet rather than the asset section and usually do not consist solely of cash. For these reasons, retained earnings are not a current asset.
Companies can use their retained earnings to reinvest in their businesses and finance future growth opportunities or strategic investments.
True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.
True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.
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