Retained Earnings Calculation

The year-to-date retained earnings account contains the year-to-date profit or loss for the location.  The net amount added to the year-to-date retained earnings account each period is calculated by adding the current period transactions to the location's Balance Sheet accounts. 

If the total of transactions to the Balance Sheet accounts for an accounting period is a debit, representing a net increase in assets, the location has made a profit for the period.  If the total of transactions is a credit, representing a net decrease in assets, the location has sustained a loss.  The sign of the accumulated total is then changed, and the amount is added to the year-to-date retained earnings account balance.