How do you label negative retained earnings on a balance sheet?
The term “Retained Earnings” is generally used to describe that portion of stockholders equity derived from profits. (An older term, no longer generally in use, is “Earned Surplus”.) Retained earnings represents the accumulation of earnings less dividends since the beginning of the company or accounting entity. In successful companies the retained earnings account normally has a positive balance; but if total losses should exceed total net income it is possible that the retained earnings account could have a negative balance. This is generally known as a “DEFICIT”, in to the question.
