Why are retained earnings not considered an asset of the firm?

Question

I am taking a corporate finance class and I am having trouble getting back to my roots on why exactly this is true.

Answer 1

You have the right idea generally. Retained earnings (credit balance) means the co. has made profits. But remember credits must be balanced by debits. The retained earnings plus the share capital are represented by all the net assets (net debits) of the co. (all the assets less the liabilities)