Are net income and retained earnings the same thing?

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Shelley 0 Comments

Is net income the same thing with the retained earnings and what are their differences? How is the net income related with the retained earnings reserve account?

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score 0 · Answer 1 · 2012-12-02T23:01:13+00:00

No they are not the same thing. Retained earnings are the undistributed accumulated profits less the accumulated losses. Net Income is essentially the profit for the year so yes, it is part of the retained earnings but you will need to account for the past results and the past dividends as well.