Accumulated earnings are the total profits of a company that have been retained in the business instead of being distributed as dividends.

They:

Increase when the company earns profit

Decrease when dividends are paid or losses occur

Are shown under reserves or retained earnings in the balance sheet

Accumulated earnings are often reinvested to:

Expand the business

Purchase assets

Reduce debts

In simple terms, accumulated earnings are the total profits kept in the business over the years.