A corporation's "earnings and profits" account is equal to the company's "retained earnings" account on its balance sheet.

Question

Quizplus · Accepted Answer

The earnings and profits account is a tax accounting term used by the IRS to determine the amount of taxable dividends a corporation can distribute to shareholders. It is not necessarily equal to the retained earnings account on a company's balance sheet, which is a financial accounting term that shows the accumulated income a company has earned and not distributed as dividends.

A Corporation's "Earnings and Profits" Account Is Equal to the Company's