Question

1. What type of normal balance does the Retained Earnings account havelong dashdebit or​ credit? 2. Which type of income statement account has the same type of balance as the Retained Earnings​ account? 3. Which type of income statement account has the opposite type of balance as the Retained Earnings​ account? 4. What do we call the difference between total debits and total credits on the income statement section of the​ worksheet?

Answer 1

1. Retained earnings are part of common equity and therefore has a credit balance.

2. Profit & Loss A/c accumulated balance shows or has the same balance as the retained earnings account.

3. There is no such specific account opposite to retained earnings account, but a loss incurred shows negative balance of profits which if accumulated will depict complete negative balance in Profit & Loss A/c

4. The difference between total debits and total credits of income statement is Net Loss in case Debit is more than credit value and Net Income in case if credit value total is more than debit value in total.