Definition
Retained profit is the UK GAAP everyday synonym for retained earnings: the cumulative net profit of a business that has not been distributed to shareholders as dividends. It is presented as a component of equity on the balance sheet and updated each period as the net profit (or loss) from the income statement closes into it. The formal term under FRS 102 is “profit and loss account”, a legacy UK GAAP term that continues in current practice.
What retained profit means in practice
For a UK bookkeeper, “retained profit” and “retained earnings” are interchangeable in everyday speech and writing. The choice between them is stylistic. Older UK practitioners and those trained on legacy UK GAAP tend to default to “retained profit” or “profit and loss account”; younger practitioners and those who started on Xero or QuickBooks tend to default to “retained earnings” because that is what the platforms display.
The substance of the figure is the same as retained earnings: a running total of every period’s net profit minus every dividend paid since incorporation. The closing balance appears as a line in the equity section of the balance sheet and as the closing line of the retained-earnings column on the statement of changes in equity.
A practical example: a UK consultancy at 31 March 2027. Opening retained profit (1 April 2026): 60,000. Net profit for the year: 62,250. Dividend paid in February 2027: 20,000. Closing retained profit: 102,250. The FRS 102 statutory accounts label this line “profit and loss account”; the Xero balance sheet labels it “retained earnings”; the bookkeeper might refer to it as “retained profit” when emailing the client. All three references point to the same figure.
How retained profit works by country
United Kingdom
UK practice uses “retained profit” interchangeably with “retained earnings” in everyday speech. The FRS 102 formal title is “profit and loss account”, a legacy UK GAAP term. The distributable reserves rules under Companies Act 2006 section 830 apply: only realised profits in this account can be paid as a dividend. Unrealised gains (typically revaluation reserves) sit separately and cannot be distributed until realised.
Australia
Australia uses “retained earnings” or “retained profits” interchangeably in everyday speech. AASB 101 Presentation of Financial Statements uses “retained earnings” as the formal term. AU bookkeepers and accountants use both terms depending on personal preference and the audience.
Canada
Canada universally uses “retained earnings”. “Retained profit” is uncommon in Canadian practice; the IFRS and ASPE terms are both “retained earnings”. A Canadian bookkeeper or accountant would understand “retained profit” as a UK term but would not use it in published statements.
New Zealand
NZ practice uses “retained earnings” formally under NZ IAS 1, with “retained profits” as the everyday alternative. The two terms are interchangeable in the same way as Australia.
Singapore
Singapore practice uses “retained earnings” under SFRS(I). “Retained profit” is uncommon in Singapore corporate reporting; the IFRS term dominates in published statements, audit work, and ACRA filings.
Related terms
Retained profit sits at the core of the equity section:
- Retained earnings is the IFRS and AU/CA/NZ/SG synonym.
- Equity is the wider balance-sheet section retained profit belongs to.
- Net profit is what closes into retained profit each year.
- The balance sheet presents the closing retained-profit line.
- The statement of changes in equity walks through every movement.
- A dividend is the main way retained profit decreases.
See also
For the substantive content (how retained profit accumulates, how dividends interact, per-country rules), see the retained earnings entry.
FAQ
See the answered questions above for retained profit vs retained earnings, the UK GAAP ‘profit and loss account’ label, and where the balance appears.