These withdrawals are not income to the partners. Withdrawals reduce the partners' capital accounts. Capital Stock Capital Stock is the amount of stock that was issued by the corporation. Retained Earnings Retained earnings is an accumulation account. It includes the corporation's net income or loss for the calendar or fiscal year and accumulated net income or losses since the inception of the corporation.
Dividends reduce retained earnings.
Dividends paid are not deductible to the corporation for income tax purposes. The capital account is called fund balance. Net income or loss is included in the fund balance. Net income increases the fund balance while a net loss decreases the fund balance. There is no capital stock, no dividends paid and no common stock issued by or for a nonprofit corporation.