The term deficit is used to refer to a debit balance in Retained Earnings accounts of a corporation .
What is meant by Retained Earnings ?
The amount of profit a business keeps after paying all of its direct and indirect expenses, income taxes, and dividends to shareholders is known as retained profits. This is the percentage of the company's equity that may be utilized, for example, to fund the purchase of new machinery, research and development, and marketing.
Retained earnings are referred to as "gathered profits" when they are accumulated over time.
Before giving you more money, banks take a look at your company's retained earnings.
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