Accumulated profits are the total profits earned by a business over the years that have not been distributed as dividends.

They:

Increase when the company earns profit

Decrease when dividends are paid or losses occur

Are shown under reserves and surplus in the balance sheet

Accumulated profits are often used for:

Business expansion

Paying off debts

Strengthening financial position

In simple terms, accumulated profits are the total past profits kept in the business instead of being paid to owners.