About earnings and retained earnings Follow

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Cell C30 (January Retained Earnings) contains a formula which adds Earnings from the Starting Balance to Retained Earnings in the Starting Balance. In our example, since the "Earnings" in the Starting Balance were $0, the Retained Earnings in January are the same as those in the Starting Balance.

This formula also subtracts any Dividends from the Cash Flow table (although in the example there are none). The formula in cell C30 (January Retained Earnings) is =B30+B31-dividends.

To abide by GAAP (Generally Accepted Accounting Principals) standards, Retained Earnings Changes Yearly, not Monthly.

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