What type of account is "Retained Earnings" in QuickBooks?

Retained Earnings is classified as an equity account in QuickBooks. This account reflects the accumulated net income that a business has retained over the years, instead of distributing it to shareholders as dividends. It is part of the owners' equity section of the balance sheet, representing the owners' claim on assets after all liabilities have been settled.

The retained earnings account is essential because it indicates how much profit has been reinvested in the business, contributing to its growth and sustainability. As the business generates income, net profits are added to the retained earnings, while losses or dividends paid out reduce this amount. Understanding the role of retained earnings as part of equity helps in effectively analyzing a company's financial health. This account is distinct from asset, liability, and revenue accounts, as those represent different types of financial elements in the balance sheet and income statement.