A debit balance in the Retained Earnings account is identified as a deficit.

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A debit balance in the Retained Earnings account means that the company has accumulated losses over time, which is commonly referred to as a deficit. A debit balance in the Retained Earnings account means that the company has accumulated losses or paid out more dividends than it has earned in profits. This is also referred to as a deficit or negative Retained Earnings.

A Debit Balance in the Retained Earnings Account Is Identified