R – Accounting Glossary
Retained earnings are profits that were not paid to a firm’s shareholders. They are reported in the ownership equity section of the firm’s balance sheet. Dividing profits between dividends and retained earnings depends on at least two things: the firm’s judgement of its own investment opportunities relative to those available in the market and any difference in tax treatment of dividends paid now and capital gains expected to result from investing retained earnings.
In business, revenue is the amount of money that a company actually receives from its activities, mostly from sales to customers. To investors, revenue is less important than profit, or income, which is the amount of money the business has earned after deducting all the business’s expenses.