Earned surplus, is defined as the balance of the net profits, net income, and gains of a corporation after deducting losses and distributions to stockholders and transfers to capital stock accounts, which is not taxable as a dividend.
In the context of corporations and business organizations, earned surplus is the earnings resulting from the profitable operations of the company. Also known as retained earnings, it is the portion of the profit that the company retains in order to reinvest in the business or repay debt.
[Last updated in January of 2022 by the Wex Definitions Team]