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Here is the explanation for the Retained Earnings.

As per the International Accounting Standards

(Reference Wiley IAS 2002: Interpretation and Application of International Accounting Standards -Chapter
17 - Stockholders? Equity)
Retained earnings. By definition, retained earnings represents a corpora- tion?s accumulated profits
(losses) less any distributions that have been made therefrom. However, based on provisions contained
in the international accounting standards, other adjustments are also made to the amount of retained
earnings. IAS 8 (revised 1993), Net Profit or Loss for the Period, Fundamental Errors and Changes in
Accounting Policies, requires the following to be shown as adjustments to retained earnings”

In Oracle applications , the Retained account is used to transfer the Net profit or loss . When you open
the first month in the new calendar year ,Oracle application zero out your expenses and revenue account
and transfer your Profit or loss in the retained earnings account. This is a credit Balance account When
there is a profit , this account will be credited and when there is loss , this account will be debited .

Here is an explanation about the Oracle General Ledger

Reference from "Oracle E-Business Suite 11i: Implementing Core Financial Applications " Book written by
by Susan Foster - Chapter 5 - General Ledger.

?This chapter describes using Oracle General Ledger to enter and post journal transactions, generate
recurring journals and allocations, enter budgets, and produce financial statements and standard General
Ledger reports. Oracle General Ledger is the system of record for all Oracle applications that produces
financial transactions including Oracle Payables and Oracle Receivables.

To fully comprehend Oracle General Ledger capabilities, the fundamental concepts of accounting must be
understood. These concepts include the accounting equation and the transaction principle.

The first concept is the accounting equation. The accounting equation states that total assets must equal
total liabilities plus owner's equity. An increase in assets must reflect a corresponding increase in liabilities
or owner's equity. In other words, the balance sheet accounts must balance. An increase in expenses may
also reflect a corresponding increase in liabilities. At year-end, the income and expense accounts are
closed to the retained earnings account in the owner's equity section of the balance sheet. In other words,
at year-end, the balance sheet still balances.

The second concept is the transaction principle. The transaction principle states that all financial
transactions must be recorded and balance. In other words, total debits for the financial transaction must
equal total credits for the financial transaction. Therefore, all financial journals in Oracle General Ledger
must balance. If not, either the difference will be posted to the suspense account or the journal must be

Both these accounting concepts apply in Oracle General Ledger and all Oracle application subsystems,
which create the financial transactions that ultimately create journal entries. A full audit trail from Oracle
General Ledger is available."
Even though Oracle application is computerized accounting system , it follows the Global General Ledger
concept like maintain your sub ledgers and Transfer to your General ledger through Journal entries .

Sub ledgers are maintained to control your payables, receivables, purchasing, Inventory . These Sub
ledgers are used for eg . Oracle Payables is used for the control of payments to vendors for goods including
capitalized items and services , expense to employees. and used to control your payables ( how much you
owe) . Payable sub ledger is not calculating the profit /loss for each transactions . Accounting set -up in
the payables are for the Liability account and interest invoices and you enter the expenses/ assets account
for invoices and other sub ledger?s concept is also same in nature like payables .
when you transfer from payables and receivables , purchasing , Inventory sub ledgers in Oracle general
ledger , you will be able to know how much profit /Loss you made . The General ledger needs an account
to transfer the difference between your expenses and income accounts. This is the reason you need an
?Retained Earning? account in General Ledger . This is a required setup in General ledger and also you
enter the retained earning account only in General ledger and not in any sub ledgers,

You enter the retained earning SGL account and the rest of the segments will be entered as default value
Eg, my third segment is the SGL account in my ACS ( Account Code Structure ) and I entered my retained
earning SGL account ( dummy value for the example ) and entered ?zeros? for other segments.