Angela Keh
Jul 18, 2012, 08:16 PM
Anyone can explain for me why retained profit of a company increase?
pready
Jul 19, 2012, 01:09 PM
Companies sell a product or provide a service so they charge a fee for this, which is called revenues. If revenues exceed the company's expenses then they will have net income. Net income that is retained by a company is called retained earnings.
At the end of each accounting period if there is net income by a campny the company will usually retain or should retain a portion of their net income. Retained profit, which is otherwise known as retained earnings increases because at the end of an accounting period a company will retain their net income for future plans like for expanding the company.