Retained Earnings is an account that tracks a company’s total earnings and losses over its life span. It’s the aggregate of all profits and losses, including dividends, that have not been passed through to shareholders. The normal balance of retained earnings is a credit, which means it increases when a business earns or retains a profit and decreases when a business incurs a loss. Retained earnings can be used to fund future operations or pay off debts, making it an important part of a business’s financial health.