What defines net income earned by the company since incorporation and not yet distributed as dividends?

The definition of net income earned by a company since its incorporation that has not yet been distributed as dividends is best captured by retained earnings. Retained earnings represent the accumulated net income that has been retained in the business after dividend payments have been made to shareholders. This figure is crucial as it indicates how much profit a company has reinvested back into the business to fuel growth, pay down debt, or support operational needs, rather than distributing it to shareholders.

The retained earnings balance changes over time as the company earns additional profits (increasing retained earnings) or pays dividends (decreasing retained earnings). It is an essential component of equity and reflects the company's financial health and ability to generate profit over time. Understanding retained earnings allows investors and analysts to evaluate a company's reinvestment strategy and overall financial sustainability.

In contrast, accounts payable refers to short-term liabilities that represent money owed to suppliers and creditors. Contributed capital relates to the funds that shareholders have invested in the company, primarily through the purchase of stock. Stockholders' equity encompasses total equity, including retained earnings and contributed capital, but it is a broader measure that includes more than just the retained earnings component.