Is Retained Earnings Closed At The End of The Year

 

Retained Earnings is not closed at the end of the accounting period as it is a Permanent Account unless the business is going into liquidation, retained earnings account is not closed, so retained earnings closing entry is not recorded at the time of closing entry process.

Retained Earnings is that part of net income which is retained in the business for funding different business projects and for other emergency purposes.

Statement of Retained Earnings is prepared to calculate retained earnings.

In fact, Income Summary Account and dividend account are closed to retained earnings account at the end of the accounting period. In other words, all the temporary accounts are closed at the end of the accounting period and not permanent accounts (Assets, Liabilities & Equity).