Retained earnings are the total accumulated after-tax profits of a business that have been reinvested into the business rather than distributed to its shareholders. This money is held in the business’s balance sheet and can be used for various different purposes such as investing in new assets or paying off outstanding debts. As a result, retained earnings are both an asset and an expense because they represent funds that are available to the business but also must be paid out as dividends or taxes at some point in the future. Ultimately, understanding the purpose of retained earnings revenue or expenses can help businesses make informed fiscal decisions that will ensure their continued financial health.