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Retained Earnings Normally Has An Account Balance That / A Debit And Credit Balance In Retained Earnings Is Called What? Accordi ng to the Rules of Deb it A nd Credit , when Retained Earnings increases, we credit it and when it decreases, then we debit it. The N ormal B alance or usual balance for retained earnings account is Credit and it is a favourable balance or positive balance for these. It shows accumulated Profit. If there is a debit balance, then we called it a accumulated loss or deficit that is unfavourable or negative balance for retained earnings account or earnings surplus account. Retained Earnings Is Also Known As What? It is also called earnings surplus. So, we ca n say that  a credit  balance in retained earnings is called accumulated profit while a  debit balance in it is called accumulated deficit or loss.

Negative Retained Earnings / Retained Earnings Deficit   If the Retained Earnings Account has a debit balance then it is a negative retained earnings or retained earnings deficit. This is due to accumulated losses suffered by the business in previous accounting period. So, the company is unable to declare Dividend to shareholders / stockholders during the current accounting period. A negative retained earnings is recorded in Stockholder’s Equity Section with the account title “Accumulated Deficit”