Retained earnings is an account on your income statement that holds your profit/loss from year to year. With each new year, the revenue and expenses must be cleared out to begin accruing for the new year - the balances are moved to retained earnings.  In Evosus, retained earnings will automatically increase/decrease when the last accounting period of the year is closed. For example, if your year end is December 31st, then your accounting defaults will be set to January for the first month of the account year.  On January 1st all revenue and expenses would be cleared out and the profit/loss would show in retained earnings.