Good Example Of Essay On Retained Earnings

I agree with the statement that it would be more realistic to treat the retained earnings account as more than a tool for making the credits equal the debits. The retained earnings are often viewed as the residue that enables the accountant to balance. In my view, the retained earnings should be recognized as key entries in accounting. The determination of retained earnings should not be based on what is left over. The importance of retained earnings is lost to many people.
I think that it would be better to treat retained earnings as major elements in accounting. A company should determine the retained earnings it wants for a given year and based on that, it can then proceed to pay out the dividends. The retained earnings should be given a significant role in accounting. The retained earnings should be allowed to play a role in decisions made by the company. The managers of a company should incorporate retained earnings in their decisions about the goals of the company. They can do that by stating the goals they want the company to achieve, and then laying out the plan towards goal achievement. The plan can include an amount of retained earnings that will be used to achieve the goals. In accounting, the retained earnings will be having a specific figure and will no longer be seen as a residual amount.
Retained earnings are important because they can be used to achieve the goals of the company. Retained earnings should then be given a lot of significance, and not treated merely as residual income. They can be very instrumental in the decision making process of the company.