Retained Earnings concept is one of the main accounting terms, which is essential if we want to understand the structure of the balance sheet and financing means by which assets of a business are being financed. This article will explore this accounting term and practical example helping to understand this concept better. Concept Considering the term of Retained Earnings first we need to cover Equity definition. Owners’ equity is a residual claim of the shareholders to the assets of the business. Residual means that first business have to pay back liabilities and only afterwards what is left can be distributed to the shareholders. So Equity is a difference between Assets…