Retained earnings
Retained earnings are part of company's net income which is left after paying out dividends to shareholders. It uses to reinvest in the main business.
Formula = (Previous Retained earnings + Net income) - Net dividend paid to shareholders
Reserves
Reserves refers to a fund which an enterprise creates for fulfil future contingencies and unexpected liability. It is a part of the profit it uses to meet future losses or liability. Usually company transfer certain percentage of profit to reserves every year before giving dividend.
