Importance of Calculation of Retained Earnings (Accounting) in Academic Curriculum
Retained Earnings, as the name indicates, is the sum or amount of money that is made available as a profit after all operations of a company or concern has been carried out. This money is usually reinvested in business, or distributed among share holders. For the purpose of academic curriculum based accounting calculations, retained earnings is usually predicted along with the previous years' profits and other expenses of the current fiscal year is subtracted to arrive at the value. This should be included in the balance sheet while tallying the accounts and the students' task is to depict profit in the balance sheet.
Difficulties faced by students while solving Calculation of Retained Earnings (Accounting) problems
Considering the difficulties involved in the tallying of the balance sheet, by including the accurate retained earnings calculated from the sum of retained earnings in the previous year, current years' profits after subtracting the shares, salaries, dividends and other forms of expenses, the students find it cumbersome to ultimately show the exact profit and retained earnings. Even if one value is not considered, the entire balance sheet might go wrong and the students will not be able to bring out a correct value.
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