Retained Earnings Statement
Net income retained in a corporationAdd: Net incomeLess: Dividends
A retained earnings statement, also known as a statement of retained earnings or an equity statement, is a financial report that shows the changes to a company’s retained earnings over a specific period of time. Retained earnings are the portion of a company’s profits that are not paid out in dividends but are instead kept within the company for reinvestment or other purposes.
The retained earnings statement typically includes several key pieces of information, including the beginning balance of retained earnings, net income or loss for the period, any dividends paid out to shareholders, and any other adjustments to the retained earnings balance. The final balance shown on the statement represents the ending balance of retained earnings that will be carried forward to the next accounting period.
To create a retained earnings statement, the company will need to review its financial records and calculate the net income or loss for the accounting period. This figure is then adjusted for any dividends paid out to shareholders or other changes to the retained earnings balance. The beginning balance of retained earnings is then added to this figure, and the final total is calculated.
Companies may use the retained earnings statement to provide important information to shareholders and investors about the financial health of the company. By tracking changes to the retained earnings balance over time, stakeholders can gain insights into how the company is performing and how it is managing its profits.
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