1. What Are Beginning Retained Earnings?

Beginning retained earnings represent the accumulated profits from previous periods that a company carries forward at the start of a new accounting period. This amount equals the ending retained earnings from the prior period.

2. How the Calculation Works

The formula is simple:

Where:

• Beginning RE — Retained earnings at the start of the period
• Prior Ending RE — Retained earnings at the end of the previous period

Explanation: Retained earnings carry forward from one period to the next, adjusted by net income/loss and dividends during the period.

3. Importance of Retained Earnings

Details: Retained earnings show how much profit a company has reinvested in the business rather than distributed to shareholders. They are a key component of shareholders' equity on the balance sheet.

4. Using the Calculator

Tips: Enter the ending retained earnings from your previous accounting period (found on your prior balance sheet) to calculate the beginning retained earnings for the current period.

5. Frequently Asked Questions (FAQ)

Q1: Can beginning retained earnings be negative?
A: Yes, if accumulated losses exceed profits in prior periods, retained earnings can be negative (called an accumulated deficit).

Q2: How does this differ from ending retained earnings?
A: Ending RE = Beginning RE + Net Income - Dividends. Beginning RE is just the starting point.

Q3: Where do I find prior ending retained earnings?
A: On your previous period's balance sheet under shareholders' equity.

Q4: Do startups have beginning retained earnings?
A: New companies typically start with $0 retained earnings in their first period.

Q5: How often should retained earnings be calculated?
A: Retained earnings are calculated at the end of each accounting period (monthly, quarterly, annually).