What the difference between Retained earnings and Reserves?

Key Differences Between Retained Earnings and Reserves

1.       Retained Earnings are left after paying dividends while Reserves are transferred before declaring dividend.

2.       Reserves are a part of Retained Earnings but Retained Earning is not a part of the Reserves.

3.       Retained Earning has no further classification, whereas Reserves are classified into Revenue and Capital Reserves.

4.       Retained Earnings ensures solvency of the company. On the other hand Reserves helps in fulfilling losses if any.