1. Definition of Retained Earnings (RAN) Retained Earnings…
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1. Definition of Retained Earnings (RAN)
Retained Earnings (RAN) represents the account balances at the end of an accounting period, transferred to the beginning of the next. It ensures the continuity of accounting entries from one year to the next, particularly for balance sheet accounts (assets, liabilities, equity).
2. Monthly Approach: Principle
In the monthly approach, the RAN is recalculated and integrated at each monthly closing. This means that account balances are updated regularly, providing an accurate and continuous view of the company's financial position.
3. Annual Approach: Principle
The annual approach involves performing the RAN only at the end of the accounting period. The entries are then transferred only once, often after the accounts have been validated by a chartered accountant or at the official closing.
Retained Earnings (RAN) represents the account balances at the end of an accounting period, transferred to the beginning of the next. It ensures the continuity of accounting entries from one year to the next, particularly for balance sheet accounts (assets, liabilities, equity).
2. Monthly Approach: Principle
In the monthly approach, the RAN is recalculated and integrated at each monthly closing. This means that account balances are updated regularly, providing an accurate and continuous view of the company's financial position.
3. Annual Approach: Principle
The annual approach involves performing the RAN only at the end of the accounting period. The entries are then transferred only once, often after the accounts have been validated by a chartered accountant or at the official closing.
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| 165 | |
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